Tencent, Asia’s second highest valued tech firm, has bought a five percent share in Tesla. According to a filing, the Chinese firm scooped up 8,167,544 shares for around $1.7 billion to become one of Tesla’s largest shareholders.
The news itself sent Tesla’s share price up three percent in pre-market trading. The purchase was arranged on March 17, and those now-Tencent-owned shares are worth around $2.2 billion at current market value.
Tencent is a prolific investor. It holds equity in Snap, this year’s hot tech IPO, among others following an early investment. While that interest in messaging makes sense since Tencent’s operates China’s dominant chat app — WeChat — it isn’t immediately clear whether the Tesla investment has strategic undertones. An alliance with Tencent could significantly boost Tesla’s efforts in China, which is already impressive. Chinese sales accounted for 15 percent of Tesla’s $7 billion revenue last year.
Related investments in Tencent’s portfolio include electric car maker Nio, which just raised $600 million and was formerly known as NextEv, and Didi Chuxing, China’s largest taxi on-demand service, which is in the process of buying Uber China and recently launched a U.S.-based research lab.
Tencent will be a “supportive shareholder” according to company President Martin Lau’s newly opened Twitter account
Disclosure of this investment comes after Tencent made a series of announcements around its artificial intelligence efforts. The firm poached a senior machine learning researcher from rival Baidu to staff its China-based AI research lab. Google’s AlphaGo, of course, made headlines when it defeated an ex world champion of the ancient Asian strategy game last year.
Elsewhere, Tencent last week led a $350 million investment in popular photo sharing and video streaming app Kuaishou, which we previously reported is aiming to go public in the U.S. as soon as this year.
Tencent just had a record year of revenue growth after it reported total sales of $21.9 billion for 2016. That figure was up 48 percent, representing the company’s highest revenue jump since 2012. Net profit for the year increased by 43 percent to reach $5.9 billion.