Tencent, Sea Group’s largest shareholder, yesterday announced it was divesting about 14.5 million shares it owned, cutting its shareholding from 21.3%-18.7%. The market seemed to have reacted violently, sending Sea’s share price down by more than 11% in yesterday’s trading session.

Many friends have asked us what is our take on the sale – is it part of China’s continued crackdown on big tech (remember Tencent also relinquished almost all its JD shares recently)?

Here are some of our thoughts:

  1. This is probably more of a request from Sea Group, rather than an initiative from Tencent; Sea is not a Chinese company and there is no reason for the Chinese government to play a hand in this;
  2. However, outside China there are rumours about Sea Group being a proxy of Tencent, especially in India, a market Shopee is keen to explore further;
  3. Tencent trimming shareholding and relinquishing voting power could very likely be a signal to regulators and the public that Sea Group is not its proxy in anyway;
  4. This in effect reduces Sea Group’s regulatory risks in the countries it operates in, especially under current geopolitical landscape and the US-China (de facto) cold war;
  5. However, while it will probably work with most countries (including the US), whether Indian regulators will see it this way is a question mark;
  6. Either way, the business relationship between Tencent and Sea will continue, and Tencent still retains most its financial benefits (equity holding) in Sea Group;
  7. It is probably more important to see whether Shopee and Garena can sustain their growth and narrow losses in key markets when people are now able to resume activities offline.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.