Alibaba Group said to be close to raising $8 billion (

31 July 2012 23 h 29 min Comments Off

Some US Internet companies may be unpopular with investors these days, but a Chinese one is finding plenty of takers.

The Alibaba Group, a Chinese e-commerce giant, is close to completing a more than $8 billion round of financing that will value it at as much as $43 billion in equity, according to two people briefed on the matter.

Alibaba plans to use the bulk of that new money to buy back a 20 per cent stake in itself from Yahoo for $7.1 billion. Yahoo owns 40 per cent of Alibaba.

One Yahoo executive who signed off on that deal with Alibaba, Ross Levinsohn, announced Monday that he was leaving the Internet company. The departure of Levinsohn, who served as Yahoo’s interim chief executive for three months, was expected after the company’s board hired Marissa Mayer from Google as its new leader.

With its financing nearly in place, Alibaba is prepared not only to solidify its position as the most valuable privately held Internet company but also to take a big step toward separating itself from Yahoo, which has struggled to revive its brand and stock price. Alibaba’s financing round includes a $1.5 billion sale of convertible preferred shares, based on a $43 billion equity valuation for the company, and the sale of $2.6 billion in common shares, at a roughly $35 billion valuation, the people briefed on the matter said. They requested anonymity because the discussions are private. Alibaba is also close to borrowing $4 billion.

The agreement with Yahoo stipulated that Yahoo could receive more than $7.1 billion if its Chinese partner raised money at a significantly higher valuation than it is expected to. Yet because the sale of preferred shares and common shares are subject to certain discounts, Alibaba is still expected to pay close to the original amount.

Still, that price represents a big return on Yahoo’s investment. Yahoo invested $1 billion in Alibaba about seven years ago, gaining a 40 per cent stake in what was then seen as a promising Chinese startup company.

Now the Alibaba 40 per cent stake makes up more than half of Yahoo’s $20 billion market value. Under the agreement hashed out in May, Yahoo will sell back another 10 per cent of Alibaba shares when the Chinese company goes public and divest itself of the rest at later date. Shares of Yahoo fell nearly 1 per cent Monday to close at $15.98 per share.

The two companies have butted heads a number of times in recent years. Alibaba’s decision in 2010 to spin off its Alipay online payment business prompted protests from Yahoo that it had not been properly consulted. The dispute was not settled until last summer.

Alibaba has long sought to buy back Yahoo’s interest in itself, though attempts to reach an agreement fell apart many times. Irritated that Yahoo was considering selling a minority stake in itself to investor groups last year, Alibaba threatened to wage a hostile takeover attempt to try to forestall such a possibility. The US company eventually abandoned the idea.

Alibaba is raising billions of dollars from a patchwork of international backers. Nearly a dozen investors, including hedge funds, sovereign wealth funds, mutual funds and private equity firms, will buy the preferred shares, these people said. China Investment Corp., that country’s sovereign wealth fund, will participate in the purchase of the common shares. The China Development Bank, is expected to provide a substantial portion of the loan to Alibaba.

Source: (31/07/2012)

Related posts:

Comments are closed

Other News

  • China (mainland) film Brilliant future expected for Chinese cinema: interview

    Brilliant future expected for Chinese cinema: interview

    Jiang Wen (R), a well-known Chinese director, walks down the red carpet with his wife Zhou Yun at the opening ceremony of the 70th Venice Film Festival in Venice, Italy, Aug 29, 2013. [Photo / Xinhua] (Xinhua, 04 Sep, 2013)Chinese films have achieved over the past few years very positive results in terms of both quantity and quality, and will drive their technology-led development, 70th Venice Film Festival president Alberto Barbera told Xinhua in a recent exclusive interview. This venerable [...]

    Read more →
  • Breaking news China (mainland) film Cloudary extends script to movie industry

    Cloudary extends script to movie industry

    (, 26 Aug, 2013) Cloudary Corp – an online literature platform owned by interactive media giant Shanda Group – said on Friday that it reached a film script agreement with the Chinese movie firm Seven Stars Films. Seven Stars Films, a movie production and investment firm owned by Chinese media entrepreneu r Bruno Wu, will link Cloudary’s literature with the world’s movie industry. Wu, who is married to popular TV host Yang Lan, founded Seven Star Films in 2012. The [...]

    Read more →
  • Breaking news China (mainland) film China’s movie market booms with local content

    China’s movie market booms with local content

    ( Agencies, 23 Aug, 2013) In “American Dreams in China”, Cheng Dongqing is giving a lecture in an abandoned factory in Beijing . Snow falls through the damaged roof and a power cut sends students reaching for their flashlights. The movie , about how young Chinese in the 1990s tried every means to learn English so they could study overseas, is part of a boom in domestic productions that is outpacing foreign film s at the box office in China. [...]

    Read more →
  • Breaking news China (mainland) film Fast forward with film

    Fast forward with film

    (China Daily, 23 Aug, 2013) In the past year, Chinese films have galloped ahead like a dark horse, beating Hollywood imports. It is hardly surprising that most of these domestic hits are comedies. Comedy is mostly local. When Hollywood sent scouts to recover the secret formula, many of them reported that these Chinese movies were not particularly funny. Of course not. When you translate every line into English, you have lost much of the fun, leaving only a few sight [...]

    Read more →
  • Breaking news China (mainland) Digital Mobile game firms looking abroad

    Mobile game firms looking abroad

    (China Daily, 21 Aug, 2013) Intensifying domestic competition is driving Chinese mobile game developers into overseas markets, said Google Inc, owner of the world’s most used smartphone operating system. Japan and South Korea may become “sizeable” money-spinners for developers in China in the coming years, it added. “Tapping into South Korea and Japan makes sense for Chinese developers, because both countries have a large smartphone user base and high sales volume in the mobile gaming sector,” said Ben Zhang, China [...]

    Read more →
  • Breaking news China (mainland) tv PPTV denies buyout rumors

    PPTV denies buyout rumors

    (, 14 Aug, 2013) Online video provider PPTV has denied rumors it will be jointly acquired by e-commerce giant Alibaba Group Holding Ltd and Hunan Satellite TV. “We have noticed related media reports. PPTV is operating independently, well, and we have nothing to announce at present,” PPTV told China Daily on Wednesday. A report from IT industry portal said on Wednesday that the prospective deal is almost closed, with the transaction reaching $400 million. It cited venture capital sources [...]

    Read more →
  • Breaking news China (mainland) film Film industry needs long tail to grow

    Film industry needs long tail to grow

    (China Daily, 15 Aug, 2013) The domestic film market registered record half-yearly box office returns of 10.9 billion yuan ($1.77 billion) in the first six months of this year, up 35 percent year-on-year, and there have been excited voices saying that the Chinese film industry is about to boom in the international market. However, box office success is just part of the industry’s chain, and without the further development of licensed movie merchandising, the Chinese film industry is still in [...]

    Read more →
  • Breaking news China (mainland) Digital New WeChat game becoming painfully popular

    New WeChat game becoming painfully popular

    (, 15 Aug, 2013) A new mobile phone game on WeChat, a social network app in China, is proving so popular that it’s causing hand injuries for many Chinese users. The game, which was recently introduced to WeChat’s 400 million subscribers, allows users to compete online with their friends in aircraft battles. Within two hours after the release of the game on Aug 5, there were more than 180 million downloads. But Zou Cheng, an orthopedic doctor at Hangzhou First [...]

    Read more →