Retail in Asia

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Australia’s Afterpay sells minority stake to Tencent, eyes Asia entry


Australian digital payments firm Afterpay announced its sale of a minority stake to Chinese conglomerate Tencent for AU$300 million.

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Equating to a 5% stake, Tencent’s investment could help the buy now, pay later company expand in Asia – a market where the staggered payment model remains nascent — as the two companies consider integrating aspects of their payment platforms.

“Tencent’s investment provides us with the opportunity to learn from one of the world’s most successful digital platform businesses,” said Afterpay co-founders, Anthony Eisen and Nick Molnar, in a press release.

“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,” continued Afterpay co-founders, Anthony Eisen and Nick Molnar.

Tencent, which operates China’s leading digital payments service, Weixin Pay, as well as digital entertainment, online advertising, and fintech and cloud services, praised Afterpay for its “attractive business model.”

“Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally in terms of Afterpay’s customer centric, interest free approach as well as its integrated retail presence and ability to add significant value for its merchant base,” said James Mitchell, chief strategy officer, Tencent.

Founded in 1998, Tencent’s communications platforms include Weixin, WeChat and QQ, in addition to Weixin Pay, which facilitates an average of over 1 billion commercial transactions per day.

Looking forward, both Hong Kong and mainland China look to be geographic markets for future growth, according to analysts, adding to Afterpay’s recent success in the U.S. and its continued push in the UK.

“We now consider Hong Kong, and possibly a collaboration for mainland China, as new possibilities. These markets are difficult to enter, but with Tencent as a partner it changes the landscape,” Bell Potter analyst Lafitani Sotiriou told the Australian Financial Review.

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The Afterpay investment follows the stake purchase in European buy now, pay later leader Klarna, by Tencent’s main competitor in China, Ant Financial, in the beginning of 2020.