Alibaba agrees to take 33 percent stake in Ant Financial
(31 January 2018 – China) Alibaba has agreed to acquire a 33 percent stake in Ant Financial, opening the way for the Chinese tech giant's financial services affiliate to go public.
Under the terms of the acquisition, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights it owns which are exclusively related to the financial unit. The deal will have no cash impact on Alibaba.
The new arrangement sees the two firms kill off a deal which currently sees Ant Financial pay 37.5 percent of its pre-tax profits to Alipay in royalty and technology service fees.
Alibaba has not had a stake in Ant Financial since founder Jack Ma spun out Alipay in 2011, citing new Chinese regulations.
The new arrangement is seen as a useful step towards an initial public offering for Ant, which was valued at US$60 billion in its 2016 funding round.
Being part-owned by a US listed company could also help with acquisitions. A planned US$1.2 billion deal with Moneygram was recently blocked by US authorities over national security concerns.