Chinese internet titan Tencent is divesting its vast portfolio. On Tuesday, the company announced plans to offload more than $3 billion worth of shares in Sea, a Singaporean internet conglomerate, trimming its stake in Sea from 21.3% to 18.7% and bringing its voting rights under 10%.
The move came less than a month after Tencent decided to hand $16 million of its stock in JD.com to its shareholders. The transition would lower Tencent's position in JD.com to around 2.3%. As part of the deal, Martin Lau, Tencent president and CEO Pony Ma's top lieutenant, would retire from JD.com's board.
Chinese e-commerce operator JD.com and Singaporean entertainment and e-commerce group Sea are some of Tencent's most important strategic bets. Before the rise of Pinduoduo, which is also backed by Tencent, JD.com was Tencent's main defense against Alibaba's growing e-commerce empire. Through Sea's video games operator Garena, Tencent-owned titles have established footprints across Southeast Asia.
Tencent made these recent divestments against a backdrop of China's antitrust crackdown and a campaign on "common prosperity." Speculation is thus rife that Tencent is voluntarily dismantling its ironclad alliance to be in the government's good graces. This argument might explain Tencent's Christmas present to shareholders -- its JD.com stock distribution. In a similar answer to the government's effort to curb big tech's influence, Alibaba is weighing a sale of about 30% of its share in Twitter-like Weibo to a state conglomerate, Bloomberg reported last month.
The rationale behind Tencent's sale of Sea shares seems less clear. Some investors suggest it could be linked to India's toughening stance on Chinese investments. Shopee, Sea's e-commerce arm, has been gearing up to crack the Indian market.
Despite its willingness to reduce its influence over other tech giants, Tencent has not slowed down its overall investment pace. The 23-year-old firm has invested in over 1,200 companies to date, according to IT Juzi, a Chinese startup data aggregator. In 2021 alone, it deployed more than 130 billion yuan ($20 billion) across 278 companies, setting a record high. It remains to be seen whether Tencent will cut its influence over other major allies, including the likes of food delivery platform Meituan, video sharing site Bilibili and Pinduoduo.