Alibaba buys a third of Jack Ma's Ant Financial

[HONG KONG] Alibaba Group Holding has bought a third of Ant Financial, the online financial services giant controlled by billionaire Jack Ma, five years after proposing a deal to strengthen ties between the two internet giants.

Alibaba, co-founded by Mr Ma, received a newly issued 33 per cent equity interest in Ant Financial, the company said in a statement on Tuesday. Ant would no longer need to pay 37.5 per cent of its pre-tax profits to the e-commerce giant, it added.

Since starting as Alipay in 2004, Ant Financial has grown into a US$150 billion behemoth that offers micro-lending, insurance, credit-scoring and the country's largest money-market fund. The company is now acquiring assets overseas via deals in India and Thailand, en route to a potential initial public offering.

An investment shores up Alibaba's relationship with the internet finance giant and could bolster its own valuation, though many investors have already incorporated Ant's value.

Alibaba had been entitled to 37.5 per cent of Ant Financial's pretax earnings based on a deal the two struck in the run-up to Alibaba's 2014 IPO. Officially named Zhejiang Ant Small & Micro Financial Services Group Co, the company is one of Mr Ma's most closely watched assets, and tightly linked to Alibaba.

That earlier agreement was brokered after a dispute between Alibaba and Yahoo! Inc in 2011. At the time, Alibaba transferred Alipay into an entity controlled by Mr Ma, citing concerns that it wouldn't be permitted to conduct business in China while it had foreign ownership.

BLOOMBERG