China's Tencent Buys 5% Stake in Tesla -- Update

By Anne Steele 

Tencent Holdings Ltd. has taken a 5% stake in Tesla Inc., making the biggest company in China one of the largest owners of Elon Musk's cash-hungry electric car maker.

The internet giant paid about $1.8 billion to take the passive stake in Tesla this month, according to a filing, amid Mr. Musk's recent push to raise money. The move puts Tencent among the biggest owners of Tesla's shares, according to the latest publicly available data.

Representatives from Tencent and Tesla weren't immediately available to comment.

Tesla shares, which have risen 26% so far this year, climbed 1.6% premarket to $274.60.

Earlier this month, Tesla made moves to strengthen its fragile balance sheet amid a risky ramp-up of Model 3 production. At the time, it said it was offering $250 million in common stock and $750 in convertible notes.

Billed as a cheaper offering by a company known for pricey super cars, the Model 3 is intended to sell in much higher volumes than the current models and compete with more mainstream brands.

Tesla recently closed its $2.6 billion acquisition of SolarCity, combining Mr. Musk's electric-car and solar-energy companies, and dropped "Motors" from its name as it repositions itself as a clean-energy company.

Tencent has been on a tear of late, with shares surging more than 40% over the past year, thrusting it ahead of e-commerce giant Alibaba Group Holding Ltd. and Industrial and Commercial Bank of China, the world's biggest bank by assets. Tencent owns China's largest social network, WeChat, which has 889 million monthly active users.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

March 28, 2017 08:21 ET (12:21 GMT)

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