CIC seeks US$2b stake buy in Alibaba
Source: Agencies |
May 25, 2012, Friday
|
Print Edition
Print Edition
SOVEREIGN wealth fund China Investment Corp is in advanced talks to buy a stake of up to US$2 billion in Alibaba Group, sources said, 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.
The involvement of CIC, China's giant sovereign wealth fund which manages around US$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 emphasizes the potential value of the company. Bankers said Alibaba Group could have a value of about US$100 billion over the next 3 to 4 years, and incentives in the deal encourage Alibaba to list by 2015. That IPO 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 US$7.1 billion, valuing Alibaba at US$35 billion.
Alibaba is raising US$4.6 billion of that target via 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 US$2.5 billion in cash would allow Alibaba to fund the full US$7.1 billion purchase.
Sources with direct knowledge of the matter said CIC's US$2 billion purchase of the Alibaba stake would help the e-commerce firm complete its funding for the Yahoo buy.
Alibaba is also in talks with private equity firms that would help in funding the remaining US$500 million, sources said.
The involvement of CIC, China's giant sovereign wealth fund which manages around US$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 emphasizes the potential value of the company. Bankers said Alibaba Group could have a value of about US$100 billion over the next 3 to 4 years, and incentives in the deal encourage Alibaba to list by 2015. That IPO 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 US$7.1 billion, valuing Alibaba at US$35 billion.
Alibaba is raising US$4.6 billion of that target via 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 US$2.5 billion in cash would allow Alibaba to fund the full US$7.1 billion purchase.
Sources with direct knowledge of the matter said CIC's US$2 billion purchase of the Alibaba stake would help the e-commerce firm complete its funding for the Yahoo buy.
Alibaba is also in talks with private equity firms that would help in funding the remaining US$500 million, sources said.
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