China’s social media giant Tencent and its related online ticketing company Weiying Technology have agreed to invest $85 million in YG Entertainment. The company is one of Korea’s leading talent agencies – representing acts including Psy (“Gangnam Style”) and 2NE1 — and content producers.
The investment deal and plans for joint development were announced Tuesday. The Chinese pair are subscribing for $55 million of new shares and are also buying $30 million of existing equity from YG’s largest shareholder, Hyun-Suk Yang and its CEO, Min-Suk Yang.
Following the investments Weiying will own 8.2% of YG and Tencent 4.5% of the enlarged company. That puts them as the third and fourth largest backers of the company behind L Capital Asia, the venture investment arm of luxury goods firm LVMH.
"YG has seen over 30% growth every year for the past ten years and in order to maintain such strong growth, YG must expand its business in the Chinese market. In the near future, YG will establish a joint venture in China with the partners to expand the activities of YG artists, actors and actresses and discover and nurture local Chinese artists,” YG said in a statement.
Korean content and talent firms have become popular targets for outbound Chinese capital. Fosun International and Alibaba are both investors in SM Entertainment, while the other member of the leading trio JYP has a joint venture with China Music Corp.
The investment moves are hastened by the huge popularity of Korean artists in the Chinese market and growing overlap in film, TV and music. Recent Chinese restrictions on import of content have instead lead to a rise in film and TV co-productions and growing cross-border corporate activity.
YG is known for its hip-hop and electronic dance music with artists like Big Bang. It also operates subsidiaries for fashion model management, beauty and sports.
Tencent has been working with YG since 2015 with QQ Music exclusively distributing YG’s music and MV content in China. YG and Tencent also plan to co-produce media content together in the near future.
"Leveraging our extensive user reach, multi-platform capabilities and deep understanding of the China market, we look forward to working with YG to meet the huge appetite in China for popular Korean entertainment such as music, concerts and variety shows,” said Tencent, which operates the massively successful WeChat (aka Weixin) and QQ messaging platforms.