(Yicai) July 7 -- Kuaishou Technology’s shares tumbled after it revealed that Tencent Holdings has offloaded over a third of its stake in the Chinese short-video platform operator, stripping the internet giant of its major shareholder status.

Kuaishou [HKG: 1024] ended down 12 percent at HKD40.46 (USD5.16) a share in Hong Kong today. Tencent's stock [HKG: 0700] added 2 percent to close at HKD461.20 (USD58.80).

Tencent sold 273 million shares of Kuaishou in an off-market block trade after market hours yesterday, the Beijing-based video site said in a stock exchange filing late on the same day. Tencent's stake shrank to about 9.4 percent from around 15.7 percent as a result of the sale.

Kuaishou did not disclose the identities of the buyers, stating only that the shares were placed with multiple third parties that have no affiliation with the company. The transaction price was also not disclosed.

Based on Kuaishou's intraday trading range of HKD42.12 to HKD46.18 yesterday, Tencent may have cashed out between HKD11.5 billion and HKD12.6 billion (USD1.5 billion and USD1.6 billion).

In comments included in the filing, Tencent emphasized that it remains confident in Kuaishou's long-term prospects, adding that the pair will maintain mutually beneficial ties and ongoing strategic cooperation.

The stake reduction comes only days after Kuaishou said it will spin off Kling AI and raise as much as USD3 billion for the artificial intelligence-based video-generation business at a roughly USD18 billion valuation, bringing in external investors including Tencent, Alibaba Group Holding, and Baidu.

The disposal fits Tencent’s broader strategy of concentrating resources on core business operations while gradually reducing exposure to non-core holdings, Ng Lai Yin, a strategist at Everbright Securities International, told Yicai. In his view, the decision to reduce the stake is unlikely to be materially linked to Tencent's participation in the Kling AI financing round.

Early-stage investing in tech startups has long been a key part of Tencent's business model. Beyond generating financial returns, these investments help the Shenzhen-based company build partnerships across its broader ecosystem. In January last year, it offloaded stakes in Weimob Group and Ubtech Robotics for a combined HKD1.7 billion (USD212 million). Earlier investments in firms such as Meituan and JD.Com also produced substantial gains for Tencent and its shareholders.

"Tencent will actively review its investment portfolio and assess potential adjustments, with proceeds from share disposals allocated to shareholder returns or new investment initiatives," it noted in January last year.

Tencent first invested in Kuaishou's Series C financing round in 2016, followed by multiple top-up investments. When the video site debuted on the Hong Kong bourse in 2021, Tencent's stake was at a peak of around 21.6 percent, ranking as its largest institutional investor.  After the lock-up period expired, Tencent gradually pared its stake, trimming it to about 15.7 percent in 2024.

Editors: Tang Shihua, Martin Kadiev