(Yicai) July 7 -- Shares of Kuaishou Technology tumbled after it said domestic internet giant Tencent Holdings has offloaded over a third of its stake in the Chinese short-video platform, stripping it of its major shareholder status.

Kuaishou [HKG: 1024] plunged 8.7 percent to HKD41.98 (USD5.35) a share as of 10.40 a.m. in Hong Kong today. Tencent's stock [HKG: 0700] rose 4.4 percent to HKD471.80 (USD60.15).

Tencent sold 273 million shares of Kuaishou through 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 divestment.

The buyers were multiple independent third parties with no ties to Kuaishou, the company said, without disclosing their names and the price of the transfer.

Based on Kuaishou's share price range of HKD42.12 to HKD46.18 throughout yesterday's trading session, Tencent may have cashed out between HKD11.5 billion and HKD12.6 billion (USD1.5 billion and USD1.6 billion) from the deal.

Tencent retains confidence in Kuaishou's long-term growth prospects, the latter noted, citing a statement from the former, adding that the pair will maintain mutually beneficial ties and ongoing strategic cooperation.

On July 2, 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.

Tencent's divestment of Kuaishou shares aligns with its strategy of focusing on core operations and winding down non-core investments, Ng Lai Yin, strategist at Everbright Securities International, told Yicai. The sale bears little relevance to its investment in Kling AI, he added.

Early-stage investments in tech startups form a core segment of Tencent's business, with its relevant division not only fostering ecosystem partners but also generating steady investment gains. In early January last year, it offloaded stakes in Weimob Group and Ubtech Robotics for a combined HKD1.7 billion (USD212 million), while its earlier bets on Meituan and JD.Com also delivered substantial returns to its shareholders.

"Shenzhen-based Tencent would 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 Kuaishou's initial public offering share lock-up period expired, Tencent gradually reduced its stake, trimming it to about 15.7 percent in 2024.

Editors: Tang Shihua, Martin Kadiev