Chinese Internet company Tencent Holdings Ltd. said Thursday it
has set up a program that enables it to issue bonds worth up to $5
billion over the next year, at a time when it has been going on an
acquisition binge to compete with archrival Alibaba Group Holdings
Ltd.
While it is unclear when and how much debt that Tencent might
issue, the program gives it the capacity and flexibility to raise
more funds. In China's vast Internet sector, the battle for
supremacy between Tencent and Alibaba is intensifying as both
companies spend more to launch new services or buy other domestic
businesses. Tencent, whose main businesses are online games and
social networks, and Alibaba, which runs China's most popular
shopping sites, are both broadening their operations through
alliances and acquisitions.
Tencent said in a statement that the proceeds from any bonds
issued out of the program--known as a medium-term note
program--will be used for "general corporate purposes," without
giving details. Tencent said it has hired Deutsche Bank to set up
the program.
Over the past seven months, the company has struck several deals
worth over $1 billion in total. In March alone, the company
announced three deals: a $215 million agreement to buy a 15% stake
in Chinese e-commerce company JD.com., a $180 million deal to buy
15% of online real-estate-services firm Leju Holdings Ltd., and a
$500 million deal to buy 28% of Korean mobile games firm CJ Games
Corp.
Alibaba, meanwhile, has also been on a buying spree. Since the
start of last year, the company has spent more than $3.5 billion on
seven acquisitions, including AutoNavi Holdings Ltd., an online
mapmaker, and a minority stake in Sina Corp.'s Twitter-like Weibo
microblog business. In May 2013, Alibaba raised $8 billion in a
syndicated bank loan. While it used part of that loan to refinance
its existing debt, the remaining portion has helped it finance its
expansion.
Tencent issued its first U.S. dollar bond worth $600 million in
December 2011 and issued another $600 million bond in August
2012.
Write to Fiona Law at fiona.law@wsj.com and Juro Osawa at
juro.osawa@wsj.com
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