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Alibaba, Tencent, Baidu set to become investors in Foxconn unit after IPO

China's tech titans Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd., collectively known as BAT, are set to become major shareholders in Foxconn Industrial Internet Co. Ltd., the Taiwanese smart factory unit of Hon Hai Precision Industry Co. Ltd., according to the South China Morning Post, which cited a May 27 statement to the Shanghai Stock Exchange.

The three internet conglomerates received 21.78 million shares each in the smart factory unit, joining 20 strategic investors that were granted 590.8 million shares, or 30% of the total offering size, according to the statement from Foxconn Industrial Internet. Other investors named in the statement include Central Huijin Investment Ltd.'s asset management arm and China Life Insurance Co. Ltd.

The allotments to Alibaba, Tencent and Baidu are worth 300 million yuan each based on the IPO price of 13.77 yuan, and have a lock-in period of three years.

The Foxconn unit is preparing to raise 27.1 billion yuan in a Shanghai listing. The company plans to offer 1.97 billion shares at 13.77 yuan apiece, Foxconn Industrial Internet said in a May 21 Shanghai Stock Exchange filing. It will be the largest mainland Chinese market debut since the stock market crash in 2015, reportedly valuing the company at about US$43 billion.

Foxconn Industrial Internet said it plans to use the capital raised to finance projects in eight areas including industrial internet, cloud computing, data centers, 5G wireless and smart manufacturing technologies.

According to the first-quarter earnings report of Taiwan's contract electronic maker and supplier to Apple Inc., Hon Hai Precision Industry's profits dropped by 14.5% year over year to NT$24.18 billion, missing estimates.

As of May 25, US$1 was equivalent to 6.39 Chinese yuan and NT$29.97.