The shares of Bitauto Hldg Ltd surged after announcing that it received investments from JD.com and Tencent Holdings today.
The stock price of Bitauto increased almost 4% to $87.04 per share at the time of this writing, around 2:08 P.M. Eastern Standard Time (EST).
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Terms of the investment agreement
JD.com and Tencent Holdings agreed to invest an aggregate of $1.3 billion in cash and resources to Batauto. In addition, both companies also agreed to invest $250 million in cash to YiXin Capital Limited, a provider of e-commerce related automotive financing platform and a subsidiary of Bitauto.
JD.com is investing $400 million in cash and around $750 million in resources including exclusive access to its new and used car portfolio available on its e-commerce websites. Its investment is in consideration for a total of approximately $1.15 billion of newly issued ordinary shares from Bitauto.
On the other hand, Tencent Holdings will purchase $150 million worth of the newly issued stock of Bitauto, which will be priced at $73.31 per share.
Furthermore, JD.com and Tencent Holdings will invest $100 million and $150 million respectively, in newly issued series A preferred shares of YiXin Capital.
The three companies will work together in improving the online automotive transaction services offered to car buyers in China. JD.com and Tencent Holdings will control 25% and 3% of outstanding shares of Bitauto after the closing of the deal.
JD.com will obtain a set in the board of directors of Bitauto. It will also own 17.7% stake in YiXin Capital. Tencent Holdings will own 26.6% stake in YiXin Capital.
Bitauto is positive about its e-commerce automotive business
In a statement, Bitauto Chairman and CEO William Bin Li said JD.com and Tencent Holdings are ideally positioned to support the company citing the status of both companies as China’s leaders in e-commerce, social media and big data.
“We are confident about the outlook of our automotive e-commerce business. Our goal has always been to provide China’s new and used car customers with the best possible car purchasing experience,” said Bin Li.
On the other hand, JD.com Chairman and CEO Richard Liu said, “This investment is a major step forward in our long-term strategy of partnering with industry leaders in the vertical categories most important to our customers…We are building our vision of making JD.com a one-stop solution for Chinese consumers looking to buy authentic, high-quality products.”
Meanwhile, Tencent President Martin Lau said, “With the pooled auto e-commerce resources of Bitauto and JD.com and our extensive user base and analytics and auto-related media assets, we collectively can build an efficient online platform to facilitate online automotive transactions and provide one-stop financing solutions to auto buyers in China.”