Tencent, one of the biggest web companies in China, is investing $300m in Digital Sky Technologies of Russia, bringing two internet powerhouses of the emerging markets together in a long-term strategic partnership.
The move is the latest sign that Chinese internet companies are looking to diversify beyond their home markets.
It could provide an indication of whether a Chinese internet company can transfer its success to international markets.
DST owns several popular web properties in Russia through a portfolio of communications, gaming and social networking sites that closely mirrors Tencent’s in China.
Outside Russia, DST is best known for investing $300m in Facebook, through its Global fund.
DST Global’s backers include Goldman Sachs, US hedge fund Tiger Global and Alisher Usmanov, the Russian investor.
Tencent, which is investing in DST Russia, is the world’s third-largest internet company by market capitalisation, and its rapid rise has seen it overtake Baidu, China’s leading search engine, and Alibaba, the e-commerce group.
Its properties include QQ, the world’s largest instant messaging service, with more than 500m active accounts.
Tencent’s investment in DST gives it a 10.26 per cent interest in the Russian group, with power to appoint an observer to its board.
Although Tencent will hold only 0.51 per cent of voting rights in DST, the two companies hailed the deal as the beginning of a long-term strategic partnership.
“Our teams share many common views and beliefs and a clear vision about the significant opportunities ahead,” said Yuri Milner, DST’s chief executive.
“We look forward to working together with Tencent and benefiting from their expertise as we both push forward with our plans to capitalise on this immense growth in our markets.”
Mr Milner added that Russia’s internet market was two years behind China’s, but learning from Tencent would help it catch up.
Analysts have hailed Tencent for its unrivalled ability to make money out of its vast user base.
Over five years, it has built a broad offering of virtual goods, games and services that QQ members can buy at minimal cost.
That strategy has helped Tencent achieve gross margins of almost 70 per cent and driven its share price up more than three-fold in the past year.
Martin Lau, president of Tencent, said: “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 to explore new business opportunities in the Russian-speaking internet markets.”