By Gina Lee

Investing.com – Internet technology giant Tencent Holdings (OTC:) Ltd. (HK:) will of its stake in JD (NASDAQ:).com Inc. (HK:) to its shareholders. Each 21 shares that a Tencent shareholder holds, an eligible investor will get one share at JD.com.

JD.com’s Hong Kong shares fell 7.09% to HK$259.40 ($33.25) by 11:36 PM ET (4:36 AM GMT), while Tencent’s Hong Kong shares jumped 4.02% to HK$460.80.

Tencent’s stake is worth HK$127.69 (16.37 billion). This will see Tencent decrease its JD.com stake from 17% down to 2.3% following the distribution. Tencent will no longer be JD.com’s largest shareholder after the transfer, with Walmart (NYSE:) Inc. taking the role, according to Refinitiv ownership data after the transfer.

Tencent made its first investment in JD.com in 2014. In an announcement, Tencent stated that it was the right time for the transfer because JD is now able to finance itself.

The company’s investment strategy is to invest, share and support growth in portfolio companies and then exit when that company raises its capital. “The company and JD.com will continue to maintain their mutually beneficial business relationship, including via their ongoing strategic partnership agreement,” Tencent said in the announcement.

However, the impact for JD.com is “definitely negative,” Everbright Sun Hung Kai analyst Kenny Ng told Reuters.

“Although Tencent’s reduction of JD.com’s holdings may not have much impact on JD.com’s actual business when the shares are transferred from Tencent to Tencent’s shareholders, the chances of Tencent’s shareholders selling JD.com’s shares as dividends will increase,” he said.

Tencent might be considering selling its investments in ecommerce companies as part of the JD.com sale Pinduoduo Inc. (NASDAQ) and Meituan, a food delivery company (HK:), are under increasing regulatory pressure.

A source said that Tencent does not plan to sell these investments as they are less well-developed.