Much like in the US, China’s Internet giants are borrowing large amounts of money in order to take each other on for dominance of the online market.
On Friday, it was reported that Tencent Holdings, best known for its WeChat mobile app, is seeking a loan of up to $2 billion, two people involved in the financing told Thomson Reuters LPC, a loan-focused news service.
Tencent has gone on a bit of a buying spree lately, investing in a many business that will expand its online footprint. These include gaming, intellectual property rights for entertainment, cloud computing and online financing, as well as investments in start-ups engaged in cash-fueled wars for market share, reported Reuters.
Trying not to fall behind, Baidu, China’s dominant Internet search firm, is trying to secure a $1 billion loan, and e-commerce behemoth Alibaba Group Holding secured a $3 billion five-year loan last month.
Reuters’ sources said Tencent was seeking a bullet loan of between $1.5 billion and $2 billion for general corporate purposes. In a bullet loan, the principal is repaid at the end of the term.
It’s expected that they will use the same group of banks as the previous loan — ANZ, Bank of China (Hong Kong), Citigroup, HSBC and Mizuho Bank.
A Tencent spokeswoman declined to comment. Citigroup, Mizuho and ANZ declined to comment. Bank of China and HSBC did not respond to requests for comment.