China's Tencent Invests $300 Million In Russian Facebook And Zynga Backer DST

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Today is a big day in Asia’s Internet industry. Earlier today, Korea’s NHN said it will buy major Japanese portal Livedoor, and now Tencent, China’s largest Internet company, has announced [PDF] it plans to invest $300 million in cash into Russian investment firm Digital Sky Technologies (DST).

DST itself has been in the news repeatedly over the last few months, especially after investing $200 million in Facebook and $180 million in Zynga last year. On its homepage, the firm claims its portfolio companies command 70% of all page views on the Russian speaking web.

Tencent racked up $1.8 billion in revenues last year [PDF], with operating profit reaching a staggering $882 million. The Shenzhen-based company’s key service is instant messaging platform QQ, which boasted no less than 523 million active users at the end of last year. Tencent also operates a web portal (QQ.com), a social network (Qzone) with nearly 400 million active users (self-reported), a gaming portal (QQ Games), a search engine (SOSO), and a number of other services.

Tencent will get a 10.26% stake in DST, 0.51% of total voting power and the right to nominate “one observer” to DST’s board of directors. Both companies also said they’ll be entering a strategic partnership, without providing details.

The tie-up with DST is by far the biggest international commitment Tencent made to date. The motivation is obvious: the company may be the biggest in China’s huge web market (and even one of the biggest worldwide) but internationally speaking, it’s a nobody. In the US, Tencent (unsuccessfully) launched QQ Games in 2007, followed by an international version of the QQ messenger and a smaller investment in India one year later.

But I have a feeling Tencent will do a lot more to boost its presence outside China in the months to come.

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