ShareChat in talks with Tencent to raise $200 million via OCD: Report

If the deal fructifies, the funding will be routed via a Europe-based entity due to the stiff foreign direct investment rules pertaining to investments from China

e4m by exchange4media Staff
Updated: Feb 25, 2021 12:27 PM
Tencent Sharechat

Bengaluru-based social network company ShareChat is in talks with Chinese tech giant Tencent to raise $200 million through optionally convertible debentures, according to a report in The Economic Times.

If the deal fructifies, the funding will be routed via a Europe-based entity due to the stiff foreign direct investment rules pertaining to investments from China.

The report further stated that the significant financial investment could at a later stage entail a change in management control of ShareChat. According to sources quoted in the report, this may pose a risk related to local data storage and processing.

The company was also in talks to raise over $200 million from American tech giants Google and Snap at a valuation of more than $1 billion. According to the TechCrunch report, the Series E financing round is slated to be larger than $200 million with Google alone financing more than $100 million of that amount.

ShareChat has raised about $264 million and was valued at nearly $700 million last year. In September 2020, ShareChat had raised $40 million in a pre-Series E round led by existing investors —Lightspeed Ventures, Twitter, and SAIF Partners — along with new entities. The other investors in this round include Pawan Munjal of the Hero Group in his personal capacity, DCM Shriram Promoters Family Office, and India Quotient.

In 2020, Google was reportedly in talks to acquire ShareChat for $1.03 billion. Both ShareChat and Google had signed a non-binding proposal and appointed investment bankers to take the talks forward.

In FY20, ShareChat's parent company Mohalla Tech had generated maiden revenues of Rs 9.38 crore. The company earned Rs 8.92 crore from advertisement while e-commerce contributed Rs 45.41 lakh to the total revenue.

The company's other income stood at Rs 28.74 crore compared to Rs 25.63 crore. The company's net loss had widened to Rs 676.85 crore from Rs 555.81 crore. The company's total expenses for the fiscal year was Rs 714.97 crore as against Rs 581.45 crore.

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