58.com (NYSE: WUBA), China’s largest classifieds marketplace, entered into a definitive agreement with internet services giant Tencent, for the latter to invest in the stuff app Zhuan Zhuan, incubated by 58.com.

Under the agreement, 58.com will spin off its Zhuan Zhuan app, and certain other used goods channels, from the 58.com and Ganji classified platforms, and Tencent will invest $200 million U.S. in cash, and additional business resources, in the new business group, in return for a minority equity ownership.

Incubator 58.com will continue to send the new, co-owned platform traffic, and give it other business support.

Michael Jinbo Yao, chairman and CEO of 58.com, commented, “We are excited to welcome Tencent as both a partner and a direct investor in Zhuan Zhuan. This is a significant endorsement of a platform that was launched only a little over a year ago. Online transactions of used goods are very underdeveloped in China, but mobile technology, and increasing user awareness, are starting to create significant new opportunities. We are looking forward to accelerated growth in this market with more support from Tencent.”

Wei Huang, CEO of Zhuan Zhuan, added, “Thanks to our platform, trading used goods is getting easier and can benefit everyone. Since our launch in November 2015, we have been picking up tremendous momentum by continuously focusing on improving the user experience and developing a robust online ecosystem. This transaction will immediately help to strengthen our support, and we are excited to explore how we can further enhance the overall service capabilities and technology of the business.”

The deal is subject to certain closing conditions, and is currently expected to close in the second quarter of 2017.

The news should affect Alibaba/Taobao’s stuff app Xianyu, and may signal the end of Tencent’s own, underperforming, QQ-based stuff app Xianbei.

For the original report see: http://58.investorroom.com/index.php?s=43&item=85

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