Cash-rich Tencent aims for M&A, China listing

* Has $877 million in cash, eyeing acquisitions

* Targets online games, value-added services for M&A

* China listing dependent on rule changes

By Joanne Chiu

SHENZHEN, China, June 16 (Reuters) - Tencent Holdings (0700.HK), which runs China's largest instant messaging (IM) service, has a war chest of about 6 billion yuan ($877 million) for technology acqusitions in China and elsewhere in Asia.

Chairman Ma Huateng also told reporters Tencent would list its shares in China if regulators change rules banning companies registered overseas from listing in China. The move would cash in on the popularity of the company's IM service QQ.

Hong Kong-listed Tencent is registered in the Cayman Islands but based in the south China boomtown of Shenzhen. Ma spoke to reporters on Monday, the day before Tencent's fifth anniversary as a listed company.

Ma said the 6 billion yuan figure related to the end of March. "The company is retaining the cash for mergers and acqusitions.

"We have been doing some small-scale acqusitions with some investing directly and others in cooperation with private equity. We will seek opportunities in China and Asia, with (a) focus on handset applications and online game development and other technology projects."

LISTING

Chinese regulators are expected to change listing rules in the near term to encourage overseas-listed but China-based companies such as Tencent and peers like Nasdaq-listed NetEase (NTES.O), Sina (SINA.O), and Sohu (SOHU.O) to list back home.

"We have alway been considering listing in the mainland China market and hope our clients can buy our stock. But this has to depend on the market situation and clearer regulations," Ma said.

Tencent plans to launch three or four new online games by the end of 2009, as it diversifies away from its core instant messaging service into China's fast-growing online game market. "Competition in China's online game market is keen," Ma said.

Shares in Tencent, which joined the blue-chip Hang Seng Index .HSI last year, have risen 79 percent in 2009, making it one of the best performers. The Hang Seng Index is up 29 percent this year.

Tencent stock closed at HK$89.30 on Monday. When the company listed on June 16, 2004 it sold stock at HK$3.70. (Writing by Doug Young and Alison Leung; Editing by Dan Lalor) ($1 = 6.838 yuan)