Chinese food delivery giant Meituan tanks 9% after Tencent reportedly plans to divest $24 billion stake

Shares of Chinese food delivery giant Meituan plunged 9% on Tuesday after Reuters reported Tencent is planning to sell the majority of its $24 billion stake in the company.

Tencent, which owns 17% of Meituan, is planning to placate domestic regulators and cash in on its eight-year-old investment, Reuters reported, citing four sources with knowledge of the matter.

A Tencent spokesperson said it does “not comment on market speculation” when contacted by CNBC. Meituan was not immediately available for comment.

Shares of Tencent closed 0.8% higher in Hong Kong.

Tencent, which owns China’s No. 1 messaging app WeChat, is looking to kick off the share sale this year if market conditions are favorable, Reuters reported.

A source with knowledge of the matter told CNBC that there are no current plans for Tencent to sell its Meituan stake.

Tencent invested in a company called Dianping in 2014 which then merged with Meituan a year later to form the current entity.

Investments made by China’s technology companies have come under scrutiny as part of Beijing’s sweeping crackdown on the country’s giants. Chinese authorities have looked to rein in the power of technology giants through tighter regulation in areas ranging from antitrust to data protection.

Reuters reported that part of Tencent’s reasoning behind the divestment of the Meituan stake is satisfying regulators worried about tech giants backing companies closely related to peoples’ livelihoods.

Over the past few months, Tencent has been divesting stakes in some of its biggest investments.

In December, Tencent said it would divest most of its stake in China’s second-largest e-commerce player, JD.com.

In January, Tencent raised $3 billion through the sale of some of its shares in Singapore-based gaming and e-commerce firm Sea.

Tencent’s share sales come at a time of slowing growth for the Chinese technology giant, which has been hit by a slowdown in the world’s second-largest economy and stricter regulation on the domestic gaming sector. Tencent is China’s biggest gaming firm.

Read the full Reuters report here.