Amid the ongoing scrutiny of Chinese companies, Tencent has acquired a stake worth $264 million in Indian e-commerce major Flipkart, which is largely owned by US-based retailer Walmart.
Tencent bought the 0.72% stake from Flipkart co-founder Binny Bansal via the company’s European subsidiary, Tencent Cloud Europe BV, Indian news agency PTI reported. Bansal’s stake in Flipkart is now down to 1.84%, valued at $37.6 billion.
The transaction took place in Singapore but “Flipkart informed Indian authorities about it as a responsible entity” earlier this year, PTI reported citing official company documents.
Singapore-headquartered Flipkart told the authorities that the Tencent transaction does not fall under purview of ‘Press Note 3’ which calls for scrutiny of investment that any Indian company gets from countries sharing a border with India.
The Indian government recently came up with a notification that requires citizens of nations on India’s border who are appointed as directors on boards of companies to obtain a security clearance. The move was aimed at preventing Chinese companies from circumventing Indian laws to do business in the country.
In April 2020, the authorities issued guidelines requiring mandatory government approval for foreign investment coming from those same countries as a measure to block Chinese companies from acquiring Indian companies.
Notably, the Indian government has banned a plethora of apps from Chinese companies, including gaming apps published by Tencent such as PUBG Mobile and PUBG Mobile Lite. Meanwhile, there are a number of companies operating in India in which Tencent has made investments.
Flipkart was last valued at $37.6 billion when it raised $3.6 billion in a funding round led by Singapore’s sovereign wealth fund GIC, CPP Investments, SoftBank Vision Fund 2 and Walmart.
DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global among others also participated in that round.