29 June 2017
visit http://events.sap.com/gb/fsi-forum-2017/en/home

Alibaba strengthens Alipay ties ahead of IPO

13 August 2014  |  5283 views  |  0 Chinese flag

Chinese e-commerce giant Alibaba has sold its SME loan business to the parent of Alipay in a move designed to increase the profits made on any future sale of the payments unit.

With nearly 300 million users, Alipay serves a similar role for Alibaba as PayPal does for eBay, processing around 80% of payments on the e-commerce site.

The payments business was sold by Alibaba in 2011 to Small and Micro Financial Services Company - which is controlled by the e-commerce firm's co-founder Jack Ma - over regulatory concerns.

But as Alibaba gears up for an initial public offering in New York next month, it has now sought to change the terms of its relationship with Alipay.

It has sold the loan business to Small and Micro Financial Services Company, in a $518 million cash deal. More importantly, a cap of $6 billion on any profits that Alibaba could make if Alipay or its parent are sold or go public, has been lifted.

Under the new terms, Alibaba will also now receive 37.5% of pretax income from Small and Micro Financial Company, compared with the 49.9% it has so far been getting from just Alipay.

In addition, Alibaba can buy up to a third of Small and Micro Financial Services Company if it gets the greenlight for Chinese regulators.
KeywordsE-COMMERCE

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Alibaba opens cloud computing platform for Chinese banks

Alibaba opens cloud computing platform for Chinese banks

03 December 2013  |  4192 views  |  0 comments | 3 tweets | 2 linkedin
China's Alipay pilots sound wave mobile payments

China's Alipay pilots sound wave mobile payments

16 April 2013  |  6656 views  |  0 comments | 7 tweets | 3 linkedin
China's Alibaba embarks on $732m upgrade of online payments network

China's Alibaba embarks on $732m upgrade of online payments network

12 April 2010  |  9385 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit wavestone-advisors.co.ukvisit www.response.ncr.comvisit www.events.sap.com

Top topics

Most viewed Most shared
ECB preps eurozone-wide instant payments serviceECB preps eurozone-wide instant payments s...
9499 views comments | 19 tweets | 38 linkedin
ABN Amro tests wearable tech for contactless paymentsABN Amro tests wearable tech for contactle...
9186 views comments | 10 tweets | 6 linkedin
HSBC hires Biggs to lead business model innovationHSBC hires Biggs to lead business model in...
8881 views comments | 16 tweets | 17 linkedin
Mastercard eyes opportunities to profit from sharing economyMastercard eyes opportunities to profit fr...
7774 views comments | 6 tweets | 6 linkedin
Body blow for PayKey as Apple orders Westpac off its turfBody blow for PayKey as Apple orders Westp...
7359 views comments | 12 tweets | 14 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job