Chinese online marketplace 58.com said on Monday it has reached an agreement to raise US$200 million with Tencent Holdings, for the development of its used goods trading platform Zhuan Zhuan.
Under the agreement, 58 will inject the Zhuan Zhuan App and “certain used goods related listing channels from the 58 and Ganji classified platforms” into a separate group –Zhuan Zhuan Entities.
Tencent Holdings, a provider of Internet services in China, will provide the cash funds and additional business resources for the new business group, for a minority equity ownership, according to a press release from 58.
58 will continue its direct traffic and other business support to the Zhuan Zhuan Entities, the parent firm said.
“This is a significant endorsement of a platform that was launched only a little over a year ago,” said Michael Jinbo Yao, Chairman and CEO of 58.com.
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“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.”
Since launching in November 2015, Zhuan Zhuan has picked up momentum fast, with a continued focus on improving the user experience and developing a robust online ecosystem, explained Wei Huang, CEO of Zhuan Zhuan.
“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,” said Huang.
The agreement has been approved by the company’s board of directors and is subject to certain closing conditions. The transaction is currently expected to close in the second quarter of 2017.