Chinese tech giant Tencent is set to become the second-largest shareholder in prominent K-Pop agency SM Entertainment, a move signaling a significant shift in the South Korean entertainment landscape and potentially hinting at a thaw in relations between the two countries' cultural industries.

According to a South Korean regulatory filing on Tuesday, May 27, 2025, Hybe, the agency behind global sensation BTS, plans to sell its entire 2.2 million shares in SM Entertainment to Tencent Music Entertainment for 243 billion won (approximately $177 million) on May 30. This transaction will grant Tencent a 9.7% stake in SM Entertainment, positioning it as the second-largest shareholder. The controlling stake of 42% remains with Kakao Corp and its affiliate Kakao Entertainment, as per an SM filing. Tencent Music has yet to comment on the development.

K-pop group AespaPhotographer: Etienne Laurent/AFP/Getty Images
This acquisition by Tencent comes after Hybe's unsuccessful attempt to take over SM Entertainment in 2023. Hybe stated in its filing that the sale was for "efficient management of investment assets," indicating a strategic divestment from a past endeavor.

The investment from a major Chinese entity like Tencent is particularly noteworthy given the unofficial ban on K-Pop concerts and performances in China that has been in place since 2016. This ban was reportedly a retaliatory measure by Beijing following South Korea's deployment of a U.S. anti-missile defense system.

There have been recent indications of a potential easing of these restrictions, and analysts suggest that a full resumption of K-Pop concerts in China could dramatically boost ticket revenue for major K-Pop agencies. This strategic investment by Tencent could be seen as a proactive move to capitalize on the potential reopening of the lucrative Chinese market for K-Pop.