Ali Baba founder Jack Ma, social media firm Tencent raise stakes in Huayi Bros

HONG KONG: A firm controlled by Alibaba founder Jack Ma and social media firm Tencent are set to invest a combined 2.8 billion yuan to raise their stakes in Huayi Brothers Media Corp, as China's tech giants push into entertainment.

Huayi Brothers, which produces and distributes music, movies and television programs, said in a filing to the Shanghai stock exchange that it would issue issue 145 million shares in a private placement to raise a total of up to 3.6 billion yuan ($588 million). It plans to use the cash for new movie and other projects, as well as to repay some bank loans.

The investment firm controlled by Ma will subscribe to 61.76 million shares, while Tencent, China's largest social network and gaming firm, will purchase 51.55 million shares.

Ma's investment firm and Tencent will own an 8.08 percent stake each in Huayi, up from 4.03 percent and 4.86 percent respectively. They will be the second-biggest shareholders in Huayi, after senior Huayi executives.

"The mobile internet industry is developing rapidly, while the tie-up between the media and internet industries is also increasing," Beijing-based Huayi said.

"Our alliance with Alibaba and Tencent will strengthen our development in these areas."

Huayi also signed strategic alliances with both Ma and Tencent, hoping to use links to some of China's biggest Internet firms to develop its presence in the e-commerce, online entertainment and movie business.

Huayi has been trying to boost its presence in the entertainment sector at home and abroad. Earlier in March, Huayi announced that it planned to invest $120-150 million in Studio 8, a film-making business founded by Warner Brothers ex-president Jeff Robinov.- Reuetrs