Tencent Holdings Ltd (0700.HK) is negotiating agreements with a U.S. national security panel that would allow it to keep its ownership stakes in U.S. video game developers Riot Games and Epic Games, according to people familiar with the matter.
Tencent has been in talks with the Committee on Foreign Investment in the United States (CFIUS), which has the authority to order the Chinese technology giant to divest U.S. holdings, since the second half of last year, the sources said.
CFIUS has been looking in to whether Epic Games' and Riot Games' handling of the personal data of their users constitutes a national security risk because of their Chinese ownership, the sources added.
Tencent owns a 40% stake in Epic Games, the maker of popular video game Fortnite. Tencent also bought a majority stake in Riot Games in 2011 and acquired the rest of the company in 2015. Riot Games is the developer of "League of Legends," one of the world's most popular desktop-based games.
Tencent is negotiating risk-mitigation measures with CFIUS so it can keep its investments, according to the sources. The details of the proposed measures could not be learned. They typically involve ringfencing the owner of a company from operations that have national security implications. They often call for the appointment of independent auditors to monitor the implementation of these agreements.
