YY's Huya Inc. Gets Tencent Investment, Promises Right to Buy Control

News of the agreement came just days after YY announced it had filed to sell shares in Huya to the public.

Peter H. Frank
    Mar 08, 2018 11:27 AM  PT
YY's Huya Inc. Gets Tencent Investment, Promises Right to Buy Control
author: Peter H. Frank   

YY Inc. (Nasdaq: YY), a dominant live-streaming social media platform in China, announced this morning that its subsidiary Huya Inc. signed a deal with Tencent Holdings Ltd. to receive an equity investment of $461.6 million from the giant internet company. 

While YY said it continued to maintain control over Huya after completion of this financing round, the deal also included granting to Tencent the right to purchase 50.1 percent of the voting power in Huya between two and three years from now. Huya accounted for 19 percent, or $106.4 million, of overall revenue at YY in the fourth quarter. 

News of deal sent YY shares sharply higher at the market's open this morning in New York. However, almost immediately, the company continued its roller-coaster ride of the week. 

The stock, which rose sharply in after-hours trading after its earnings announcement late Monday, plunged during the next trading session. Today's news sent it reeling once again as it opened up 6.5 percent to $134.50 per share before falling more than 5 percent by this afternoon in New York to below $120 per share. 


It's been a wild week for YY Inc. shares. (Source: Thomson Reuters Eikon)

"We are very excited about Huya's completion of series B equity financing from Tencent," David Xueling Li, chairman and acting chief executive YY, said in a statement. "This investment will reinforce and solidify Huya as the leader in the fast-growing game live streaming market in China. Supported by Tencent's strong capabilities in game development, distribution and operation, Huya will march into a new era of building and maintaining the largest game live streaming and e-sports community for young generations in China. Meanwhile, Huya remains a major asset of YY, continuously bringing significant value for YY shareholders."

News of the Tencent agreement came just three days after YY announced as part of its earnings report that it had filed a confidential registration statement with the U.S. Securities and Exchange Commission to sell shares in Huya to the public. Details regarding the timing and size of the proposed offering were not disclosed. 

The Tencent investment, as part of a series B equity financing round, was completed today, the company said.