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Exclusive: ShareChat raises $100 Mn in debt from Tencent

Vernacular social media and short video entertainment platform ShareChat has picked up another debt round worth $100 million from existing backer Tencent.

This debt round comes at a time when ShareChat is about to complete the acquisition of its rival MX TakaTak in a deal worth $700 million. After the potential acquisition, ShareChat will be the biggest player in the short video entertainment space.

ShareChat has approved the issuance of 2147 Series D debentures at the issue price of USD 46,583.64 each to Zennis Capital B.V and Hlodyn B.V respectively, regulatory filings show. Both of these entities are Netherland-based special purpose vehicles created by Chinese tech giant Tencent to route investments.

The total amount raised by these optionally convertible debentures (OCD) is $100 million and each of these debentures are convertible into 1 preference share at the option of company/investor. Following allotment, Tencent shall control 17.71% stake in the company while promoters’ collective stake has been diluted to less than 11.55%. 

Since the ban on TikTok and other Chinese apps, Moj by ShareChat, Josh by DailyHunt and MX TakaTak by Times Internet have emerged as the top three players in the short video sharing segment in terms of number of users and time spent. 

The acquisition will certainly give more scale to the Bengaluru-based company as compared to its main rival Josh. According to analysts covering the short video entertainment space, the deal appears decent exit for Times Internet which is also looking to divest several products including Gaana and DineOut.

In the past year, investors have flocked to fund ShareChat and it has amassed close to $600 million in the past 10 months and $1.17 billion till the previous round. It scooped up $266 million in its Series G round led by Alkeon Capital and some existing investors including Temasek Holdings and Moore Strategic Ventures. It also raised $225 million in debt from Tencent in April as Indian FDI laws don’t allow Chinese firms to make equity investments in Indian companies. Entrackr had exclusively decoded Tencent’s debt round in ShareChat.

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