Seeking Corporate Customers, Tencent Raises Its Stakes in WeChat Marketers

Tencent Holdings Ltd. has become the second-largest shareholder of two WeChat marketers as part of its ongoing effort to target more corporate customers.

Tencent agreed to buy 6.7% of Hangzhou-based China Youzan Ltd., the e-commerce service provider said Wednesday in a statement. An investment firm owned by Tencent will pay around HK$549 million ($69.9 million) for the stake, or an average of HK$0.53 per share.

Another subsidiary of Tencent will buy 97 million shares of Shanghai-based marketing-solutions provider Weimob Inc., according to a statement released by Weimob on Tuesday. Together with the 2.92% that it already owns, Tencent will end up holding a 7.73% stake in Weimob after the deal.

The purchases will make Tencent the second-largest shareholder of the two internet service companies.

The deals come after the tech giant unveiled a plan in September to revamp its corporate structure, including consolidating several content-focused business groups and creating a new division devoted to cloud computing and data services aimed at corporate customers.

The two companies, Youzan and Weimob, both deliver cloud-based marketing services to small and midsize companies, mostly over Tencent’s WeChat, China’s largest social media platform with 1 billion active users a month.

Founded in 2012, Youzan boasted 4.4 million registered merchants and 100,000 monthly active merchants at the end of 2018. Established in 2013, Weimob had 2.6 million registered merchants and over 51,000 paying clients as of December.

The rise comes as social media has become a major venue that businesses use to reach out to consumers to sell their products and promote their brands.

In late 2016, WeChat unveiled its “mini-programs,” which operate like apps on Apple’s iOS and Google’s Android operating systems, but don’t require downloading.

E-commerce operators see huge potential in the nimble mini-apps as they offer an easy and immediate way for users to access services through WeChat. As of the end of 2018, Tencent said over 1 million mini apps had been made available on WeChat.

The investments mark the latest fundraising efforts by Youzan and Weimob to expand their fast-growing, but money-losing businesses in the cutthroat industry. Youzan reported a net loss of HK$839 million in 2018, widening from a HK$135 million loss the year before. The company completed a backdoor listing in Hong Kong in April 2018.

Weimob reported a loss of 1.09 billion yuan ($160 million) last year, compared with a profit of 2.6 million yuan in the previous year, according to its first annual report after going public in Hong Kong in August.

Contact reporter Tang Ziyi (ziyitang@caixin.com)