Baba, Tencent and Xiaomi back big US IPOs

BEIJING – As China’s anti-monopoly and data security crackdown creeps into restrictions on IPOs in the United States, analysis shows some of the country’s largest tech companies are deeply invested in these offers of shares abroad.

Gaming and social media giant Tencent is by far the dominant shareholder, with significant holdings in half of the 25 largest fundraisers by Chinese companies issuing American Depositary Receipts (ADRs) in the United States since 2017. This is according to CNBC analysis of publicly available data. via Wind Information and S&P Capital IQ.

Chinese e-commerce giant Alibaba has a few stakes in the 25-company list, while other major Chinese tech companies like Xiaomi, Meituan and Baidu each have stakes in one or two of the stocks, according to the analysis. US asset managers BlackRock and Vanguard have also appeared frequently, usually with smaller holdings.

While Shenzhen-based Tencent is best known for its video games and ubiquitous Chinese messaging app WeChat, the company has also emerged as an investment giant.

Last year, Tencent’s holdings in listed companies grew by 785.11 billion yuan ($ 122.7 billion), more than the 160 billion yuan ($ 25 billion) in reported profits. for the year, according to the company’s annual report. This does not include its subsidiaries.

The company itself is the largest listed in Hong Kong in terms of market valuation.

Tencent said on Saturday it had been informed by the market regulator of “its decision to stop the merger of Huya and Douyu based on the results of its antitrust review.” Both companies are subsidiaries of Tencent listed in the United States for the past three years.

However, on Tuesday, the Chinese market regulator announced that it had approved Tencent’s deal to privatize the US search engine and text entry company Sogou.

For many start-ups in China, having a large tech company as a funder has often meant having access to vast amounts of data on consumer preferences.

But China’s internet industry has also been ruthless. In a 2018 book titled “AI Superpowers, China, Silicon Valley and the New World Order,” former Chinese Google Director Kai-Fu Lee said the local tech world looks like gladiatorial fights where nothing is happening. was prohibited, from copying innovations to launching defamation campaigns.

After years of loose regulation, China has stepped up its crackdown on local tech giants in recent months.

Ridesharing app Didi – in which Tencent has invested – carried out a massive IPO in the United States on June 30. In five days, the Chinese cybersecurity regulator, citing national security concerns, launched an investigation into the use of data by Didi and the subsidiaries of two Chinese companies that recently listed in the United States.

The regulator, the Cyberspace Administration of China (CAC), also said new user registrations would be suspended in the meantime.

Over the weekend, the ACC also announced that companies with data on more than one million users would likely need approval before registering overseas.

The increased scrutiny of the data follows a crackdown by regulators on tech companies since last fall over monopoly practices, which have led authorities to fine Alibaba $ 2.8 billion.