Xiaomi To Buy Stake In Billionaire Founder's Software Firm Kingsoft From Tencent

Xiaomi, the world’s No. 3 smartphone maker in the third quarter of 2014, will purchase a 2.98% stake in software company Kingsoft from Chinese Internet giant Tencent Holdings for HK$527 million, or $68 million.

Kingsoft is nearly 15% owned by Chinese billionaire Lei Jun, the main founder and CEO of Xiaomi.  Tencent owned 12.6% of Kingsoft before the agreement to sell part of its holdings to Xiaomi.  The sale is expected to close by Jan. 30, Kingsoft said in a statement at the Hong Kong Stock Exchange today.

Lei, 45,  has led Xiaomi’s transformation into one of the most explosive businesses in the global smartphone industry since the company was founded more than four years ago. At a product launch attended by 2,000 in Beijing last Thursday, Lei unveiled new models that he compared head-to-head with rival Apple ’s.  Forbes Asia in November named Lei its 2014 “Businessman of the Year.”  Unlisted Xiaomi recently raised $1.1 billion in a stock sale that valued it at $45 billion, making its worth one of the largest among the world's unlisted businesses.

Kingsoft is part of what Xiaomi calls an “ecosystem” of businesses directly or indirectly invested by the smartphone company or Lei. Last month, Kingsoft said it would purchase a 12.7% stake in U.S.-listed data storage company 21Vianet for $172.0 million.  Xiaomi also agreed to take a stake.

Lei also has stakes in U.S.-listed YY, a social site, and Xunlei, a software company.

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