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Alibaba to buy 33% stake in Ant Financial

BBR Staff Writer Published 05 February 2018

Alibaba Group has agreed to purchase a 33% stake in Ant Small and Micro Financial Services Group (Ant Financial).

Based on 2014 transaction agreements, Alibaba is now acquiring equity interest in Ant Financial through its Chinese domestic subsidiary

Both firms have agreed to make certain amendments to their 2014 transaction agreements to facilitate the current deal.

As per terms of the amended deal, Alibaba will own newly-issued equity in Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively linked to Ant Financial.

Once the deal concludes, the firms will close the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees equal to 37.5% of its pre-tax profits to Alibaba.

Alibaba Group CEO Daniel Zhang said: “This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere.”

Ant Financial CEO Eric Jing said: “We are pleased to strengthen our strategic relationship with Alibaba. This marks the next step in our collaboration to generate more strategic synergies and deliver tremendous value proposition to our customers.”

The closing of the deal is subject to customary conditions.

Ant Financial, which focuses on small and micro enterprises, includes brands such as Alipay, Ant Fortune, Zhima Credit, MYbank.

Alipay is a third-party mobile and online payment platform, which was established in 2004.

In January this year, Ant Financial terminated amended merger agreement with the global money transfer services firm MoneyGram.

The firms have terminated the deal due to the failure of securing approval from the Committee on Foreign Investment in the US (CFIUS)

Image: Alibaba Group corporate campus in Xixi, Hangzhou, China. Photo: courtesy of Alibaba Group Holding Limited.