Alibaba in talks to buy stake in Alipay

Alibaba employees work in the company’s offices in Zhejiang province. The Chinese e-commerce giant is in talks with key shareholders to regain a formal stake in its online payment affiliate Alipay.

AFP/Beijing

Chinese e-commerce giant Alibaba is in talks with key shareholders to regain a formal stake in its online payment affiliate Alipay as it prepares a hotly anticipated IPO, a report said yesterday.

The Wall Street Journal cited “people familiar with the matter” for the report carried on its website.

The WSJ said that retaking the stake in Alipay “could significantly raise the future value of Alibaba” as it readies its initial public offering (IPO).  But the report cited the people as saying that even if the deal over the stake in Alipay is clinched, it was unlikely to come before the IPO. A deal would also be subject to review by regulators in China, it noted.

The report described Alipay as “central to Alibaba’s operations” as it handles its e-commerce payments similar to how PayPal does for eBay Inc.

Analysts say the forthcoming listing is expected to raise about $10bn, which would make it the technology industry’s largest IPO since Facebook’s in 2012.

Alibaba operates China’s most popular online shopping platform, Taobao, which features hundreds of millions of product listings.  Last week Alibaba and a private equity fund backed by its founder Jack Ma said they would pay $1.22bn for a stake in China’s leading online video platform Youku Tudou.

The move comes as Alibaba diversifies beyond its traditional online shopping business through a string of acquisitions.

Ma spun off Alipay from the group in 2011, the WSJ said, saying the move was needed for the payment company to get a license in line with Chinese government regulations to keep doing business.