Tencent sells Kingsoft stake to Xiaomi

Xiaomi has agreed to buy a 2.98 percent stake in Kingsoft Corp, a provider of software and cloud computing services, for HK$527 million (US$68 million) — the latest investment by the world's No. 3 smartphone maker.

Xiaomi will buy the stake in Kingsoft from Chinese Internet giant Tencent Inc, which owned 12.6 percent of Kingsoft before the stake sale. The deal, the latest after Xiaomi raised US$1.1 billion in December to be valued at US$45 billion, is set to conclude by January 30, Beijing-based Kingsoft said in a statement to the Hong Kong stock exchange yesterday.

Kingsoft will pay an important role in Xiaomi's future ecosystem which aims to connect all smart devices with smartphones, according to industry insiders.

Kingsoft, whose shareholders include Lei Jun, Xiaomi's chief executive, will provide cloud computing services for smart devices and allow users to store, access and edit data from the devices, Lei said at a conference to release Mi Note smartphone last week.

Kingsoft will invest US$1 billion within three years to develop cloud computing services, said Lei, an ex-CEO of Kingsoft before founding Xiaomi in 2010.

Kingsoft closed 2.15 percent up at HK$16.18 yesterday, while the benchmark Heng Seng Index declined 1.51 percent.