Tiger Global picks up Alibaba stake for $199m
Tiger Global has agreed to acquire a minority stake in Alibaba Group from Chinese online game developer Giant Interactive Group for approximately $199.1 million. Giant originally invested $50 million in 2011 via limited partnerships managed by Yunfeng Capital set up specifically to hold stakes in Alibaba.
According to a regulatory filing, Giant will sell its entire interest in Yunfeng E-Commerce Fund A and Yunfeng E-Commerce Fund B to Tiger Global. The move comes about one month after the US-listed company issued a clarification regarding the involvement of its chairman, Yuzhu Shi, and an independent director, Jason Jiang, in Yunfeng Capital.
Shi and a consortium led by Baring Private Equity Asia are in the process of trying to privatize Giant in a deal worth around $2.8 billion.
Giant was one of approximately 11 LPs in the Yunfeng E-Commerce Funds, accounting for approximately 10% of the total investments across the two vehicles. In its 2012 annual report, the company stated that the value of its investment in Alibaba had increased to $60.5 million as of December 31, 2012.
Giant disclosed the investment in September 2011, the same month that Silver Lake, DST Global, Temasek Holdings and Yunfeng acquired a 5% stake in Alibaba for $1.6 billion, offering an exit to a group of employee shareholders. The deal valued Alibaba at around $32 billion.
Based on this and Giant's exit valuation - and assuming the Yunfeng E-Commerce Funds' stake in Alibaba has not changed in size since the original investment - Alibaba is now worth in the region of $127.6 billion. The e-commerce is company is expected to go public later this year.
Yunfeng is a private equity firm established by Jack Ma, founder of Alibaba, and David Yu, founder of Target Media, a display advertising firm acquired by Focus Media in 2006. It currently have around $1.8 billion under management from approximately 80 LPs.
Yunfeng raised its debut fund of $1.5 billion in 2011, sourcing capital from 20 well-known Chinese entrepreneurs - known as "founding limited partners" - including Shi and Jiang. Both men are passive investors in the fund. Jiang is also chairman and CEO of Focus Media and partnered with a PE consortium to take the company private in 2012 in a deal worth $3.7 billion.
Tiger Global is prolific investor in China's consumer internet space. It holds a 22.1% stake in JD.com, China's second-largest e-commerce company after Alibaba. Formerly known as Jingdong and 360Buy, the company last month filed for a US IPO, targeting up to $1.5 billion.
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