Bengaluru-based social media platform ShareChat, which also operates short-video app Moj, is looking to land a check of USD 200 million from Chinese technology major Tencent.
The funding will be raised through optionally convertible debentures and routed via a Europe-based entity, a report by local media Economic Times (ET) said. Optionally convertible debentures are long-term debt instruments that can be converted into shares of equity stock after a specified period. If the transaction goes through, it could subsequently lead to a change in management control of ShareChat, the report added.
Last April, the Indian government had amended the FDI rules making it mandatory for Chinese investors to get permission from Indian authorities before putting in money in any Indian company. Having a European entity to pump in the capital may help Tencent circumvent the need to seek the government’s nod to invest in ShareChat.
Over the last few months, Chinese investors including Tencent and Alibaba have been looking to offload their shares in Indian startups. However, as the nine-month-long standoff on the two countries’ shared border finally cools down, India has started reviewing the investment applications from Chinese investors. According to a recent Reuters report, India may give a green signal to 45 investment proposals from Chinese companies to invest in the country.
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In January this year, ShareChat, was reportedly in talks with American multimedia messaging firm Snap and tech giant Google to raise over USD 200 million. Prior to that, in November 2020, Google was said to be in advanced discussions with the six-year-old firm to invest USD 1.03 billion. As of now, it counts Shunwei Capital, Elevation Capital (formerly SAIF Capital), Twitter, and TrustBridge Partners as its backers.
In fact, ShareChat has been out in the market to raise its Series E round since mid-last year. In August 2020, the startup was reportedly looking to raise USD 150-200 million in fresh funds from Microsoft and Google to expand Moj, which it had put together in two days after India banned 59 Chinese apps, including ByteDance-owned popular short-video platform TikTok.
A month later, it raised USD 40 million in a pre-Series E round from a clutch of new and existing investors to further product development, grow its creator ecosystem, and establish partnerships with music labels for its new platform Moj. To date, ShareChat has raised about USD 264 million and was reportedly valued at about USD 650 million in September 2020.
ShareChat claims to have 160 million active users on its main social networking app and 80 million on its short video app.
