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Tencent Gets AVIC, CITIC and Others to Invest $850-M for Supercell Purchase

By | Oct 18, 2016 09:48 PM EDT
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Tencent Holdings has joined hands with a consortium of investors for partly funding its Supercell acquisition.

The consortium includes state-owned investment firms CITIC Capital and AVIC Capital, among others. (Photo : https://pixabay.com/en/currency-notes-yuan-chinese-1953/)

Tencent Holdings has joined hands with a consortium of investors to partly fund its Supercell acquisition.

The consortium includes state-owned investment firms CITIC Capital and AVIC Capital, among others. The company will be issuing shares to these investors.

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Once the sale of shares is completed, the co-investors will have 50 percent stake in the consortium. The consortium will no longer be the subsidiary of the company and will have indirect holding of 76.9 percent stake in Supercell's securities. Other prominent members of the consortium are Hong Kong-based CNCB and HundredCells Investment Co.

Apart from the consortium funding, Tencent will be using bank loans as well to materialize the purchase.

Tencent recently signed a $3.5 billion deal with a group of 23 banks.

This commitment included the $700 million fund from Shanghai Pudong Development Bank Co, $400 million from China Merchants Bank Co. and $1 billion from Bank of China Ltd.

The financing comes in the form of a five-year dual tranche facility. In the case of default, the creditors will only have recourse to the collateral.

Tencent has agreed to buy Supercell from Softbank Group for whopping $8.6 billion. The deal was struck in June this year and expected to be completed by the end of this month.

Tencent is looking to benefit from the booming internet market. Supercell is the company behind massively popular games, such as Clash of the Clans, Boom Beach and Hay Day. Tencent is also acquiring premium conten,t including NBA broadcasts. 

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