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Tencent to buy 5.31% of Heilan Home, create 10B yuan investment fund

Chinese menswear maker Heilan Home Co. Ltd. on Feb. 3 confirmed a stake acquisition deal with tech giant Tencent Holdings Ltd., with which it will also jointly establish a fund for future investment.

Under the proposed transaction, Tencent affiliate Shenzhen Tencent Puhe Ltd. Partnership will acquire 5.31% of Shanghai-listed Heilan for 2.5 billion yuan, or 10.48 yuan per share.

In addition, Heilan separately agreed to set up a 10-billion-yuan industrial investment fund with two other Tencent subsidiaries, Linzhi Tencent Technology and Ningbo Zhixin Investment Management Partnership.

The fund will seek investment opportunities that fit Heilan's strategies, including relevant industrial chains, fashion brands and garment manufacturers. The Jiangsu-based company has more than 5,000 stores, mostly located in China.

Tencent, which is best known for its Chinese social media platform WeChat, intends to leverage its internet resources and capital management capability to help strengthen Heilan's branding and market share.

The announcement comes shortly after Tencent was reported to be leading a group including e-commerce company JD.com Inc. and online apparel retailer Vipshop Holdings Ltd. to invest 10 billion yuan in Heilan.

This marks the latest push into retail by Tencent, after having invested in companies including Yonghui Superstores Co. Ltd. and Vipshop.

As of Feb. 5, US$1 was equivalent to 6.29 Chinese yuan.