Courtesy of Forbes, an interesting report on the continuing emergence of a global Internet power bloc along the lines of the BRICs:

“…Today China’s largest Internet firm Tencent announced a $300m investment into Russia’s Digital Sky Technologies Limited (DST). DST is the most powerful Russian Internet firm, and has investments across Eastern Europe as well as in Facebook and Zynga in the U.S. South Africa’s Naspers owns 35% of Tencent, is an active investor in digital media in many emerging markets, and shares investments (including and partnerships with DST in Russia and Eastern Europe.

Are we now seeing the emergence of a global Internet power bloc along the lines of the BRICs, one that, if we want to be facile, perhaps we can call the SARCs (South Africa, Russia, China)?

DST is now fairly well known in the U.S. after its investments in Facebook and Zynga. Hong Kong-listed Tencent, with a market capitalization larger than Yahoo’s and Ebay’s, is beginning to get the recognition it deserves as one of the top Internet firms in the world. Naspers, which may be one of the most succesful corporate media investors in history, is still under appreciated in the United States. At Tencent’s current market capitalization of around $38 Billion (approximately 295B Hong Kong Dollars), Naspers’ $32 million investment in Tencent in 2001 is worth $13.3 Billion.

So what is Tencent getting with this investment? In the release Tencent President Martin Lau said:

“We are excited to enter into a long-term strategic partnership with DST, a key global Internet player and a leader in Russian-speaking Internet markets. The investment allows us to benefit from the fast-growing Internet market in Russia, as well as to leverage our technical and operational know-how to strengthen the leadership position of DST and explore new business opportunities in the Russian-speaking Internet markets.”

I think it is also worth noting that DST, through its stake in, has a huge presence in online gaming, one of Tencent’s primary growth engines. According to DST’s corporate web site:

Astrum Online Entertainment, now a part of, is the largest developer and operator of MMO games in Russia operating more than 30 MMO game titles. Nival Online, Nikita.Online, IT Territory, TimeZero and DJ Games operate under the Astrum umbrella.

The investment in DST may also lead to Tencent co-investing with DST in deals in the US and around the world. Tencent has done smaller investments abroad–Riot Games and Outspark in the U.S., VinaGame in Vietnam, Naspers’ MIH India–but given Tencent’s size and cash balance (after the DST investment Tencent still has approximately $1.5B in cash) those deals are relatively tiny. The new partnership with DST could help bring Tencent into the first tier of global digital media investing, and the huge pools of capital DST, Tencent and Naspers control should make entrepreneurs the world over drool.”

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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