Tencent Reduces Holdings in New Oriental’s Koolearn

According to documents disclosed by the Hong Kong Stock Exchange (HKEx) on Monday, Tencent Holdings sold 74.6 million shares in New Oriental’s Koolearn from June 15 to June 16. After this round of reductions, Tencent‘s shareholding ratio in the platform decreased drastically from 9.04% to 1.58%, cashing out a total of HK$719 million ($91.6 million).

According to documents disclosed by Koolearn during its IPO, Tencent initially took a stake in the platform in 2016. Before the listing of Koolearn, Linzhi Tencent, a subsidiary of Tencent, held 12.29% shares in Koolearn. New Oriental is the largest shareholder of Koolearn, holding 66.72% of shares.

Tencent invested in many companies, primarily before their listing, and also gained investment income. However, the tech giant’s investment pace has slowed down of late. It has reduced its holdings in JD.com through dividends, as well as in Singapore-based gaming and e-commerce firm Sea.

Due to the Chinese government’s so-called “Double Reduction” policy introduced last year, the core private tutoring business of New Oriental has contracted greatly. In response to a business model crisis, Founder Michael Yu proposed the firm’s selling of agricultural goods through livestreaming channels, founding “Oriental Selection” at the end of last year. Recently, Oriental Selection, a livestreaming platform of Koolearn, has become popular based on its unique bilingual product introductions. The share price of Koolearn soared by more than 50% on June 15 and June 16.

However, the share price began to fall starting from June 17. On June 20, it fell by more than 8% to close at HK$16.98 per share. On Tuesday, the stock price was HK$16.36 per share, and the firm’s overall current market value is HK$16.372 billion.

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In addition, from June 9 to June 17, many overseas banks, including J.P. Morgan Chase & Co., Morgan Stanley, Citibank, BNP Paribas, Deutsche Bank and Interactive Brokers, also significantly reduced their holdings in Koolearn. However, Goldman Sachs and UBS chose to continue to increase their holdings in the process of stock price surges.