Tencent’s Gradual Acquisition of 5% Stake in Australian Fintech Firm Triggers Mandatory Disclosure

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Tencent’s gradually expanding stake in Australian fintech vehicle Afterpay recently crossed the ownership threshold for disclosure with the Australian Stock Exchange (ASX).

Afterpay filed a substantial shareholding notice with the ASX on Friday, to indicate that Tencent had expanded its stake in the buy-now-pay-later platform during the period from March to April.

Tencent commenced buying Afterpay shares on 27 March at a price of between $17.18 and $22 per share to initially amass a 0.5% stake.

By the end of April Tencent’s stake in Afterpay had exceeded the 5% threshold for disclosure of ownership.

Afterpay founders Anthony Eisen and Nick Molnar hailed Tencent’s investment as giving them a key advantage in the digital sector.

“Being able to attract a strategic investor of this calibre is extremely rewarding and is a testament to our team and the strength of our differentiated business model,” said Eisen.

“To be able to tap into Tencent’s vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform.”

Tencent chief strategy officer James Mitchell said Afterpay provided a strong, consumer-oriented business model.

“We see [it] developing globally in terms of a customer-centric, interest-free approach as well as its integrated retail presence and ability to add significant value for its merchant base,” Mitchell said.

The disclosure comes amidst heightened tensions between China and Australia over the economic fallout from COVID-19, with Australian media alleging that the Chinese ambassador threatened Australia’s economy with a consumer boycott.

Concerns about China’s ability to snap up depressed assets cheaply during the COVID-19 recession has prompted the Australian government to put provisional brakes on foreign investment in domestic shares.

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