Alibaba Buys Stake in Fintech Affiliate Ant Financial

Peter Castro
February 4, 2018

Alibaba Group Holding, which owns the South China Morning Post, said late on Thursday that it would gain a 33 per cent stake in finance affiliate Ant Financial in exchange for certain intellectual property rights it owns that are related exclusively to Ant Financial - a move widely regarded as clearing the road for an Ant Financial initial public offering.

No cash is changing hands, but after the deal closes the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5 per cent of its pre-tax profits to Alibaba.

Ant Financial operates China's largest online payment service Alipay, which has more than 520 million active users.

Trilegal partner Rohan Ghosh Roy is acting for Ant Financial.

The Board of Directors at Info Edge, subject to shareholders and other requisite approvals has made a decision to allow divestment of 32,629 (about 6.66 percent) equity shares of Zomato Media Private Limited of the paid-up share capital of Zomato on the fully converted and diluted basis either directly or through its fully owned subsidiary, Naukri Internet Services Limited (NISL), as may be deemed fit in the best interests of the Company by way of sale, transfer, assignment or disposal and to execute such agreements and other documents as may be required for the goal of or in relation to the divestment at an equivalent of $50 million.

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Restaurant exploration and food delivery platform Zomato has raised Dollars 200 million from Alibaba Group owned ANT Small and Micro Financial Services. "This marks the next step in our collaboration to generate more strategic synergies and deliver tremendous value proposition to our customers".

Alibaba has not held a stake in Ant Financial, the owner of electronic payment platform Alipay, since founder Jack Ma spun out the business in 2011, Bloomberg said. Inc. and Softbank Corp.

Ant Financials finds Zomato attractive as it continues to be bullish on hyperlocal businesses despite the fact that most such start-ups in India have struggled to succeed.

Sales at Chinese e-commerce giant Alibaba jumped 56% in the last quarter of 2017 thanks to record spending during its Singles Day promotion.

"Given our strong performance and clear visibility as we approach the end of the fiscal year, we are taking up our 2018 fiscal year revenue guidance to 55 to 56 percent", said Maggie Wu, chief financial officer of Alibaba.

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