PE firms, sovereign funds support Alibaba’s Yahoo buyback

Yahoo, which still owns another 20% of Alibaba, will receive $6.3 billion in cash, $800 million in preference shares, and $550 million to alter the two companies' technology and patent licensing agreement. These terms were agreed in May. Most of the $4.3 billion net proceeds - Yahoo bought paid $1 billion plus its China assets for the stake in 2005 - will go to shareholders.

Yahoo's remaining stake in Alibaba is valued at $8.1 billion. Together with the preferred stock, the implied valuation of its full holding is around $8.9 billion, the US company said in a statement. Alibaba has the right to buy back half of this stake at the time of its planned IPO. Based on the equity issue valuation, the Chinese firm is worth approximately $40 billion.

The group of private equity investors and sovereign wealth funds subscribed to a combination of common equity and convertible preference shares. The remainder of the $5.9 billion financing package comprised senior debt, half provided by China Development Bank and half from a consortium of international banks, including ANZ, Barclays, Citi, Credit Suisse, DBS, Deutsche Bank, Mizuho and Morgan Stanley.

"The completion of this transaction begins a new chapter in our relationship with Yahoo," Jack Ma, Alibaba's chairman and CEO, said in a statement. "We are grateful for Yahoo's support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo. I look forward to working with [new Yahoo CEO] Marissa Mayer and her team in our continued partnership."

Alibaba claims the recent financing package is the largest ever private facility for an independent Chinese company and the largest non-leverage buyout private financing for a technology company globally. It also caps a 12-month period during which the company has completed more than $12 billion in M&A and other financing.

In September 2011, Silver Lake, DST Global, Temasek Holdings and Yunfeng Capital were part of an investor group that purchased $1.6 billion in shares from Alibaba as a tender offer to employee shareholders and option holders. In June 2012, Alibaba completed the privatization of its Hong Kong-listed B2B trading platform Alibaba.com, purchasing all the 27% of shares it didn't already own for $2.5 billion.

In addition to Alibaba.com, the company owns a wide range of assets across the e-commerce, online payment and cloud computing spaces, including online shopping sites Taobao and Tmall, and electronic payment channel Alipay.

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• Topics
• Technology
• Buyouts
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• Greater China
• North America
• Alibaba Group
• TMT
• buyout
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• Boyu Capital
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• Silver Lake
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