Close on the heels of India's ban on 118 Chinese apps, including a few that are linked to Tencent, reports suggest that the tech giant is bringing additional investments to the popular Indian music and podcast streaming platform Gaana.
According to published reports, Tencent led the latest round of funding that pumped in $50 million into Gaana, of which 80% came from the Chinese tech giant. The rest of the fund infusion was done by Times Internet. Post the round, Tencent now owns 34.4% of the company whereas Times Group's holding got diluted to 60.18%.
The latest fund infusion comes two years after Tencent had let a $115 million investment in the company owned by Prashan Agarwal, which competes with the likes of JioSaavn, Spotify, YouTube Music and Wynk, according to currently available regulatory filings.
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At the receiving end of anti-China sentiment
In May, barely days after India locked horns militarily with China over a long-standing border dispute to its east, there were reports of Tencent announcing investments to the tune of $70 billion on new technologies in the areas of cloud computing , cyber security and artificial intelligence. The investment decision came close on the heels of the Chinese government seeking a reboot of its economy through innovations in emergent technology.
Weeks later, Tencent and Bytedance were among the Chinese companies that faced considerable backlash over India's border skirmish. This came in the form of a ban on 59 apps of Chinese make, that also included short-video sharing platform TikTok. These companies have since faced similar bans in the US and Australia.
Immediately thereafter, the federal government in India also decided to scrutinise Chinese investments closely over fears of possible hostile takeovers. The move had caused smartphone manufacturers some jitters, especially for those from across the border who are having to stall their direct lending schemes in the country.
A simple workaround
Looks like Tencent has managed to circumvent India's anti-China sentiment with its latest investments in Gaana, which has been made through its European entity Tencent Cloud BV. In the previous round, the investments came through Tencent Music Entertainment (TME), the Chinese firm’s subsidiary that manages its music streaming and karaoke services.
Gaana allotted 58,813 optionally converted debentures at Rs 63,761.93 per share to raise $40 million from Tencent, which resulted in its holding in the company going up to 34.44% and a dilution in Times Internet's stake to 60.18%. The remaining 5.38% stake comprises an ESOP pool. An estimation by Fintrackr suggests that with the latest round of fund infusion, Gaana's valuation is around $530 million.
Just so that we put things in perspective, one of the early investors in Gaana was India's phone maker Micromax, which reappeared on the crowded smartphone market recently. The reappearance coincided with the Make in India policy of the federal government that guarantees monetary benefits to manufacturers who make their products locally.
The focus is on video-sharing
In the past eight months, this is Tencent's fifth major investment in the Indian app market. The company had already investment in delivery giant Swiggy, DoubtNut, Pratilipi and Khatabook thus far in 2020.
For Gaana, the fresh infusion of funds would help it grow a short-video app HotShot that was launched post India's ban on TikTok. Currently, Gaana claims 185 million monthly active users and is targeting the 250 million mark by end March 2021. It has a music library of more than 45 million songs across multiple Indian languages. The company also boasts over 5,000 user-generated podcasts each month across several genres and languages.
Gaana and its competitors had recorded between 10-15% growth in traffic during the Covid-19 led lockdown, though off late, the company has been actively pushing its video-sharing platform Hotshot. It's close competitor JioSaavn, owned by the Reliance Jio brand, too is following a similar strategy by promoting another short-video app Triller.
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A media veteran who turned a gadget lover fairly recently. An early adopter of Apple products, Raj has an insatiable curiosity for facts and figures which he puts to use in research. He engages in active sport and retreats to his farm during his spare time.