Tencent Holdings Ltd. (HKG:0700), which operates China’s most popular online messaging service, QQ, is planning to buy 20 percent of Dianping, a Yelp-like Chinese restaurant-review site.
The Internet giant hopes to diversify its holdings and expand into China’s online-to-offline (O2O) market with the purchase, which will reportedly cost $4 million. If Dianping, which translates to "review" in English, is eventually listed overseas, Tencent will have the option to purchase another 5 percent of the company, Caijing reported on Monday.
Last year, Zhang Tao, founder and CEO of the restaurant-review site, said that his company is planning to launch an IPO within five years. The Shanghai-based company, founded by Zhang in 2003, now has more than 90 million monthly active users. In addition to restaurants, Dianping allows users to share reviews on other types of venues like shopping, entertainment and exercise in about 40 mainland cities.
The site has also expanded its services in recent years to include group purchasing, trip planning, as well as more conventional online shopping. The company was valued at about $100 million in 2007, but is now worth at least $2 billion.
The site has proven successful thus far, with about $165 million worth of venture capital, including a $4 million investment from Google China in 2007, according to Caijing.
China’s Internet companies have seen tremendous growth in the last decade, as increasing numbers of Chinese went online for the first time. Online retailers like Alibaba's Taobao.com scored record-breaking sales on last year's Single Day, Nov. 11, which has emerged as one of the most popular online shopping days in China.