Tencent is planning to export its mobile games to Western markets. (Photo : China Daily)
Chinese Internet giant Tencent Holdings Ltd. is set to invest $1 billion in a new fundraising round that could reach $20 billion for China’s biggest online provider of on-demand services, the Wall Street Journal reported.
Sources familiar with the deal told the Wall Street Journal that Tencent plans to lead an investment round for the new company, which was created last month by the merger of group-buying service Meituan.com and restaurant-review site Dianping Holdings Ltd.
According to the report, the funding round could raise about $3 billion, one of the world's biggest fundraising deals for a startup. A rivaling deal involved ride-hailing company Didi Kuaidi Joint Co., which closed a $3 billion funding round in September, with a value of $16 billion.
The report said that the $1 billion investment would be one of the biggest startup investments for Tencent, which is already an investor in Dianping. The deal is seen as part of Tencent's strategy to use its alliances with other tech firms to offer a broader range of services through its QQ and WeChat messaging and social-networking applications, each of which has over 600 million active users.
In the past few years, Tencent has invested in other tech firms which include JD.com Inc. and 58.com Inc., a company similar to Craigslist of the U.S., the report said.
Analysts said that the fundraising could further boost Meituan-Dianping's dominant position, making it a rival to other competitors such as search provider Baidu Inc.'s Nuomi service.
Meanwhile, venture capitalists noted that consolidation is a broader trend in China's Internet sector. Last month, China's two largest online travel booking services, Ctrip.com International Ltd. and Qunar Cayman Island Ltd., agreed to merge amid rising competition.
