As of Friday, Tencent’s holding in Afterpay was worth US$251.55 million.

Chinese tech, gaming, and social media giant Tencent (HKG: 0700) has bought a 5% stake in “buy-now-pay-later” company Afterpay (ASX: APT). Users on Tencent’s instant messaging platform WeChat can make payments, and book hotels and flights. (PYMNTS.com)

In a media release, fintech Afterpay welcomed Tencent as a “substantial shareholder.”

“Being able to attract a strategic investor of this caliber is extremely rewarding and is a testament to our team and the strength of our differentiated business model,” said Anthony Eisen and Nick Molnar, co-founders of Afterpay. “Tencent’s investment provides us with the opportunity to learn from one of the world’s most successful digital platform businesses.”

Tencent attracted by Afterpay’s growth in U.S.

Melbourne-based Afterpay has rapidly scaled up its business in the U.S. after enjoying excellent growth in home market Australia.

It may be noted that Tencent rival Ant Financial acquired a stake in Swedish buy-now-pay-later fintech Klarna in March. Both Tencent and Ant are major payment processing companies in China.

“Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally,” said Tencent.

Tencent was attracted by “Afterpay’s customer-centric, interest-free approach as well as its integrated retail presence and ability to add significant value for its merchant base.”

Afterpay stock surges on the ASX

The stock closed Monday at A$36.10, up A$6.94, or 23.80% after the Tencent news. At one point, the stock was up over 35%.

Analysts are bullish about the transaction.

“Tencent has been a very active investor in technology and payment companies globally, hence we believe this investment is a meaningful vote of confidence for [Afterpay’s] business model, execution, growth runway, and the [buy now, pay later] sector more broadly,” RBC Capital Markets analyst Tim Piper wrote in a note.

Related Story: FinTech: Ant Financial Beefs Up Ties With Klarna; Buys Minority Stake

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