China's CIC Eyes up to $2 Billion Stake in Alibaba Group: Sources

May 24, 2012 11:27 AM EDT

Share This Story

  • Print
  • Email

(Reuters) - Sovereign wealth fund China Investment Corp (CIC) is in advanced talks to buy an up to $2 billion stake in Alibaba Group, sources told Reuters, as the Chinese e-commerce powerhouse looks to secure the last of the funding it needs to buy back part of its stake from Yahoo Inc.

Follow us

The involvement of CIC, China's giant sovereign wealth fund which manages around $410 billion in assets, underlines the significance of the deal Alibaba has struck with Yahoo, which returns voting control back to founder Jack Ma.

It also emphasises the potential value of the company. Bankers said Alibaba Group could have a value of about $100 billion over the next 3 to 4 years, and incentives in the deal encourage Alibaba to list by 2015. That IPO exit is attracting investors to the company.

Yahoo and Alibaba struck a deal last week whereby the Chinese company agreed to buy back up to half of the 40 percent stake in itself held by Yahoo for $7.1 billion, valuing Alibaba at $35 billion.

Alibaba is raising $4.6 billion of that target through an issue of preferred shares, bank loans and the sale of a stake to existing shareholders - Singapore state investor Temasek Holdings Pvt Ltd and DST Global. Another $2.5 billion in cash would allow Alibaba to fund the full $7.1 billion purchase.

Sources with direct knowledge of the matter said CIC's $2 billion purchase of the Alibaba stake would help the e-commerce company complete its funding for the Yahoo purchase.

Alibaba is also in talks with private equity firms that would assist in funding the remaining $500 million, sources said, including Bain Capital, Blackstone Group LP, and Hony Capital.

Under the deal, Sunnyvale, California-based Yahoo and fellow investor Softbank Corp of Japan agreed to cap their voting rights in Alibaba at below 50 percent. Limiting outside ownership was a major motivation for Alibaba Chief Executive Jack Ma, a person close to Ma said.

In a round of talks that collapsed in February, Yahoo had tried to work out a complex spin-off of Alibaba assets that wouldn't trigger a big tax bill. But that deal foundered on how much value to assign Alibaba's Taobao retail operation and on how U.S. tax authorities would treat the maneuver.

Taobao, Alibaba's crown jewel and virtual cash machine, accounted for almost two-thirds of $2.8 billion group revenue in 2011. But it has come under fire over fake items sold on its platform, and was last year placed on the United States Trade Representative's (USTR) notorious markets blacklist for offering a wide range of goods that infringed copyrights.

The sources declined to be named because the discussions were private. Alibaba, Blackstone, CIC and Hony all declined comment. Bain could not immediately be reached for comment.

Get the Most Popular Mobile&Apps Stories in a Weekly Newsletter

Join Our Conversation

The HTC logo is seen with different devices from the brand HTC M10 Perfume Launching A Month Later After MWC 2016
Lava Unleashes New P7 Device Into The Indian Market
New Disney Phone Coming To Japan
Xiaomi Locks Redmi Note 3, Mi 4c And Mi Note Pro; Others To Follow Suit?
Tablet / Laptop / PC
Dell Venue 7 and Venue 8 Dell unveils Venue 7 and Venue 8 Android 4.3 Jelly Bean tablets
Retina iPad Mini facing delays, may not launch until early next year
Refurbished 128GB iPad with Retina Display now available on the Apple Online Store
Samsung Galaxy Note 10.1 – 2014 Edition: Pricing and availability now official
Amazon Logo Amazon reportedly to launch ‘Firetube’ set-top box before 2013 holidays
Samsung Galaxy Note 3 and Galaxy Gear India launch: Pricing and availability
Samsung Galaxy Gear Android smartwatch now up for pre-order in Canada
Samsung Galaxy Gear 2 reportedly in the works already, may debut at CES or MWC 2014
OS / Software
HTC Logo HTC reportedly considering Android/Windows Phone dual-booting smartphone as Microsoft pushes for deeper Windows mobile integration
iOS 7 Chrome Incognito mode leaks private searches due to bug
Sprint HTC One Android 4.3 Jelly Bean already rolling out, AT&T, T-Mobile & Verizon to follow
Microsoft Windows 8.1 now available for pre-order
Internet / Social Media
Google Downtime Google blacks out for two minutes, causes 40 percent drop in world’s Internet traffic
Xbox Music web player is live and ready for Xbox Music Pass subscribers
Facebook Android app collected phone numbers even if users never logged in
Firefox 22 brings support for web video calls, 3D gaming, and Unreal Engine 3
What's App
ZTE's new lease program ZTE’s new Lease-to-own Program for Mobile Devices
LG’s G Pay to Take on Google, Samsung and Apple
Facebook: Taxes in the UK and a new Shopping tab
Samsung’s VR Headset to be Released at $99, Hulu Jumps Onboard with Apps Ready

Most Popular

© 2016 IBT Media Inc. All Rights Reserved.mobilenapps