A subsidiary of Tencent Holdings is planning to invest almost 291 million yuan ($41.5 million) in Jiangsu Xunjie Medical Technology, an emergency medical aid firm, in the latest deal made by the Chinese tech giant despite its recent exits from a range of portfolio companies.
Xunjie, currently a wholly owned affiliate of China’s publicly listed medical device manufacturer Yuyue Medical, agreed to sell a 19.5% stake to Tencent for close to 291 million yuan at a pre-money valuation of 1.2 billion yuan ($171.1 million), the parent firm disclosed in a filing with the Shenzhen stock exchange on Monday evening.
At the proposed pricing, Xunjie should achieve a valuation of about 1.5 billion yuan ($213.9 million) upon the completion of the transaction.
The deal will make Tencent the firm’s second-largest shareholder and give it the right to nominate one of the firm’s five board directors, according to the filing.
Xunjie will add to Tencent’s expanding healthcare portfolio in China that currently includes companies such as online healthcare platform WeDoctor, health information provider DXY, cosmetic surgery-focused social networking app Gengmei, and Beijing Yuanxin Technology, which runs pharmaceutical e-commerce site Miaoshou Doctor.
Tencent remains active in healthcare investments despite slowing down its overall investment pace over recent months amid Beijing’s tightened scrutiny over the Internet and gaming sectors. Tencent trimmed stakes in some of its most prominent investments, including Chinese e-commerce major JD.com; Singapore-based Sea, which owns e-commerce firm Shopee; and Hong Kong-listed Koolearn Technology, a live-streaming unit of Chinese private education provider New Oriental.
Statistics compiled by Chinese brokerage firm Huaxi Securities estimated that Tencent has invested a combined 13.87 billion yuan ($2 billion) in 72 companies so far this year — only a fraction of the more than 200-billion-yuan ($28.5 million) it invested in the whole year of 2021.
The new investment is expected to help Xunjie “optimise its shareholding structure, provide funding to R&D, production, and operation, as well as combine its strengths with Tencent’s to elevate the operational efficiency of assets,” said Yuyue Medical in the filing.
Xunjie operates as the holding company of Primedic GmbH, an over-four-decade German medical equipment brand that specialises in the development and sales of automated external defibrillators. It posted unaudited revenues of about 66.5 million yuan ($9.5 million) and net losses of over 25.8 million yuan ($3.7 million) in the first six months of 2022.
Yuyue Medical, internationally known as “Yuwell Group”, acquired all shares in Primedic from Nasdaq-listed OSI Systems in 2017. In a statement in February of that year, OSI Systems said it had sold the German subsidiary for approximately €11.7 million ($11.7 million) in cash.