By Dhirendra Tripathi
Investing.com – Stock in gaming and e-commerce firm Sea (NYSE:SE) plunged nearly 7% in Tuesday’s premarket trading after Tencent Holdings' (OTC:TCEHY) decision to cut its voting stake to below 10% left it without the support of one of its top backers.
Tencent (HK:0700) stock closed 0.8% lower in Hong Kong.
The Chinese company and its affiliates, which together hold over 21% stake in Sea, have given notice to convert all their class B ordinary shares into class A, according to a statement by Sea. It did not mention the size of the voting stake previously held by Tencent.
However, once complete, the move will lead to Forrest Li, the founder, chairman and CEO of southeast Asia's most valuable company, having around 57% of voting rights in the company, up from 52% currently.
Sea is proposing to increase the voting power of each class B ordinary share to 15 votes from three.
The development marks Tencent’s second withdrawal from an online platform in less than a fortnight, against a backdrop of increasing pressure on China's biggest Internet groups from antitrust regulators. Last month, it said it will distribute about 457 million shares of JD.com (NASDAQ:JD), worth over $16 billion, in the form of a special dividend to its own shareholders. The exercise will cut Tencent’s holding in JD.com to 2.3% from 17%.