JD.com usurps VNG to become Tiki's largest shareholder

VNG slid lower in the shareholder structure of Tiki after recent investment rounds to be overtaken by JD.com

According to the newly released semi-annual financial report, VNG's ownership rate in Tiki by the end of the second quarter fell to 24.4 per cent from 28.8 per cent at the beginning of the year.

Meanwhile, JD.com has been continuously pouring money into Tiki since the end of 2017 and has now become the largest shareholder of the e-commerce platform. According to the National Business Registration Portal, JD.com on June 25 owned 25.65 per cent of Tiki's shares.

According to iPrice, Tiki ranks second, after Shopee, among Vietnam's top 50 e-commerce players based on their average quarterly traffic, mobile application ranking, social media followers, and number of staff. Data were collected in July 2019.

Founded in 2010, Ho Chi Minh City-based Tiki started with selling books online. After that, the e-commerce site expanded to various goods and products in fashion, technology, healthcare, and even beauty care.

Tiki started the first round of fundraising in 2012 from venture capital fund Cyberagent before closing the investment with Sumimoto. In May 2016, Tiki received an investment of $17 million from VNG in exchange for 38 per cent of the shares.

However, Tiki burned about VND380 billion ($16.52 million) in the first two years (2016 and 2017) of the investment, according to VNG’s annual reports.

While the e-commerce race getting increasingly fierce with Lazada and Shopee, Tiki had to continue raising capital. At the end of 2017, it received the first investment from China's second-largest e-commerce giant, JD.com.

In order to maintain its leading position, VNG also invested more than VND120 billion ($5.22 million) in Tiki in a private issuance earlier this year. VNG's ownership rate in Tiki at the end of 2018 was 28.9 per cent, while JD.com held 22 per cent. However, competitive pressure kept increasing Tiki's capital demand, while VNG had many other investments that needed attention, such as Zalo Pay.

In the first half of 2019, Tiki raised capital twice more. As a result, the shareholder structure also changed as JD.com officially became the largest shareholder with nearly 26 per cent while VNG's holding shrank to 24.6 per cent.

According to VNG's financial report, the value of its investment in Tiki was VND506 billion ($22 million) in the first half of this year. The company has invested an additional VND129 billion ($5.61 million) in Zion JSC, which operates the Zalo Pay platform. Earlier, Zion reported a loss of over VND133 billion ($5.78 million) in 2018, according to data from VNG's annual report.