Tencent and JD.com invest $863 million in Vipshop

Tencent Holdings Ltd and JD.com Inc. will jointly invest US$863 million into Vipshop Holdings Ltd. The social media and e-commerce giant on Monday said it will jointly raise funds for China's online discount retailer for a 12.5 percent shareholding.

Tencent will invest US$604 million for a 7 percent stake in Vipshop, while JD.com will invest US$259 million to 5.5 percent. The amount of the investment is a 55 percent premium over the closing price of Vipshop shares on Friday of US$8.44.

Tinuku Tencent and JD.com invest $863 million in Vipshop

"We hope to provide Vipshop with a marketing and payment support solution to help the company provide branded clothing and other product categories to the rising middle class of China," said Tencent President Martin Lau.

The deal is part of an alliance in China's e-commerce market where Tencent and JD.com compete fiercely against Alibaba Group Holding Ltd. Tencent last week also said it would buy a 5 percent stake in Yonghui Superstore Co Ltd.

Tencent derives most of the advantages of gaming and social media has collaborated with JD.com into the e-commerce sector and both recently increased data and payment cooperation to multiply resources to uplift Alibaba.

"The strength of Vipshop's sales and apparel business, as well as the outstanding management team will create a clear and strong synergy with us," said JD.com CEO Richard Liu.

Tencent said it would allow Vipshop to use data traffic from WeChat and JD.com said it would integrate the Vipshop feature into their apps to help the company achieve its sales targets.