Tencent and JD.com agreed to invest US$863 million in Vipshop, an online retailer of branded products largely through flash sales.

The following information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

The price to acquire newly issued shares in Vipshop was US$13.08 per American Depositary Share (“ADS”) or a 55% premium to its share price of US$8.44 per ADS. Vipshop’s shares rallied over 39% to close at US$11.75 per ADS after the announcement.

Tencent and JD.com will own 7.0% and 5.5% of Vipshop post this investment. As part of the investment, Tencent will give Vipshop a dedicated spot on Weixin digital Wallet and JD.com will also grant Vipshop real estate on some of its shopping portals.

The investments marks a significant ramp up to compete with Alibaba’s dominance in China’s e-commerce and retail space and could be a pre-cursor to an outright acquisition of Vipshop by JD.com.

 

About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kevin has over 19 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.