Private equity firms invest in China's Alibaba Group
Silver Lake and DST Global will invest in leading Chinese technology firm Alibaba Group as part in order to provide liquidity to Alibaba employees. Chinese private equity firm Yunfeng Capital, which was founded by Alibaba founder Jack Ma, and Singapore sovereign wealth fund Temasek Holdings, an existing investor in the Chinese firm, will also participate.
The transaction will be structured as a tender offer to employee shareholders and option holders as well as certain other shareholders, which will close within 4-6 weeks. People familiar with the matter told The Wall Street Journal that the deal is worth up to $1.6 billion and values Alibaba at around $32 billion. Silver Lake is investing $300 million and Temasek is putting in $300-400 million.
The move to secure an exit for employees suggests that an Alibaba Group IPO is not planned for the near future.
Alibaba Group's assets include Hong Kong-listed B2B trading platform Alibaba.com and online shopping websites Taobao Marketplace and Taobao Mall. Softbank Holdings and Yahoo invested in Alibaba in 2005, with the latter taking a 40% stake in exchange for $1 billion and control of its China-based assets.
The latest transaction values Yahoo's holding in Alibaba at nearly $13 billion, but it is unclear what this means for the US internet company.
It was reported last week that Silver Lake had contacted Yahoo as one of several private equity firms considering a bid for the company. Yahoo's stake in Alibaba and its 35% holding in Yahoo Japan are thought to be a stumbling block for any acquisition, with prospective PE bidders saying they would only participate if these assets were sold off to create a smaller, simpler deal.
Alibaba is keen to buy out Yahoo's holding and the two companies clashed last year over Ma's decision to spin out third-party payment provider Alipay into a separate company under his control. Ma was responding to a regulatory clampdown on foreign participation in the third-party payment industry, but he acted without board approval.
The sacking of Yahoo CEO Carol Bartz last week has led to questions about the company's strategy and whether it can survive as an independent entity.
The Journal's sources said that Silver Lake and DST Global investment was driven by the attraction of Alibaba's growth prospects and is not tied to relations between Alibaba and Yahoo or by wider issues relating to the US firm's future.
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