Chinese giant Tencent takes 5pc stake in Afterpay

Chinese internet giant Tencent late Friday emerged as a substantial shareholder in the ASX-listed buy now, pay later company.

Afterpay founder and CEO Nick Molnar. Picture: David Geraghty

Chinese internet giant Tencent late Friday emerged as a substantial shareholder in Afterpay with a 5 per cent stake in the ASX-­listed buy now, pay later company.

Tencent, which is listed on the Hong Kong Stock Exchange and capitalised at more than $700bn, said it was looking forward to a “deep and long-term business partnership”.

Tencent is the world’s biggest gaming company and also operates social media platforms. More recently it has been expanding into fintech and cloud services to users.

Its communications platforms include Weixin, WeChat and QQ. Its Weixin Pay service is the leading mobile payments platform in China, facilitating more than a billion commercial transactions per day.

Tencent’s buying spree began quietly buying shares from March 27 picking up Afterpay stock for a little over $17.00 it then progressively built up its stake over the next four weeks spending nearly $315m. On Friday Afterpay closed at $29.16, down 6.6 per cent.

Afterpay co-founders Anthony Eisen and Nick Molnar said they “feel very privileged to welcome Tencent as a substantial shareholder in the company”.

Afterpay pioneered the buy now, pay later model. It has 6.1 million active customers globally, and almost 40,000 active merchants around the world.

Its shares have come under pressure during the COVID-19 crisis.

“Being able to attract a strategic investor of this calibre is extremely rewarding and is a testament to our team and the strength of our differentiated business model,” Afterpay said.

“Tencent’s investment provides us with the opportunity to learn from one of the world’s most successful digital platform businesses.

“To be able to tap into Tencent’s vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform.’’

Tencent’s chief strategy officer James Mitchell said Afterpay’s business model aligned with consumer trends.