JD extends partnership with Tencent after issuing shares $220 million worth of shares

JD.com, China’s second largest e-commerce company, has extended its partnership with Tencent Holdings for three more years, enabling both companies maintain competitive advantages in the respective fields.

Under the agreement, JD will issue shares worth $220 million to Tencent over a three-year period

The renewed cooperation will allow JD to gain unique access to Tencent’s super messaging app WeChat, which has 1.29 billion monthly active users. Both parties will also continue to cooperate in a number of areas including communications, technology services, marketing and advertising, and membership services,

The strategic partnership gave Tencent access to the JD’s huge e-commerce ecosystem, including JD.com and JD logistics that remain capabilities to compete with Alibaba in e-commerce. In return, JD can leverage Tencent’s vast social network ecosystem to gain access of the large user base and promote products of its online merchants on Tencent’s super message app WeChat.

Tencent, which was the biggest shareholder in JD.com, hold roughly 2.3% of JD’s share after offloaded 457.3 million Class A shares for the amount of HKD127.7 billion in December last year. The amount is equivalent to 86.4% of its total stake or nearly 15% of JD’s total issued shares.

Explaining the decision making behind the share’s transfers, Tencent said that the board believe it is the right time to exit investments and share gains with investors as JD has reached a stage that it can self-finance its own growth in the future.

Tencent first invested in JD.com in 2014, after retreating from its own e-commerce business to compete with Alibaba Group Holding