* Alibaba raising further $2.5 bln to buy back shares from
Yahoo
* Potential IPO by 2015 seen attracting investors
* Bain, Blackstone, Hony Capital among PE funds also talking
to Alibaba
By Stephen Aldred and Prakash Chakravarti
HONG KONG, May 24 (Reuters) – Sovereign wealth fund China
Investment Corp (CIC) is in advanced talks to buy an up
to $2 billion stake in Alibaba Group, sources told
Reuters, as the Chinese e-commerce powerhouse looks to secure
the last of the funding it needs to buy back part of its stake
from Yahoo Inc.
The involvement of CIC, China’s giant sovereign wealth fund
which manages around $410 billion in assets, underlines the
significance of the deal Alibaba has struck with Yahoo, which
returns voting control back to founder Jack Ma.
It also emphasises the potential value of the company.
Bankers said Alibaba Group could have a value of about $100
billion over the next 3 to 4 years, and incentives in the deal
encourage Alibaba to list by 2015. That IPO exit is attracting
investors to the company.
Yahoo and Alibaba struck a deal last week whereby the
Chinese company agreed to buy back up to half of the 40 percent
stake in itself held by Yahoo for $7.1 billion, valuing Alibaba
at $35 billion.
Alibaba is raising $4.6 billion of that target through an
issue of preferred shares, bank loans and the sale of a stake to
existing shareholders – Singapore state investor Temasek
Holdings Pvt Ltd and DST Global. Another $2.5 billion
in cash would allow Alibaba to fund the full $7.1 billion
purchase.
Sources with direct knowledge of the matter said CIC’s $2
billion puchase of the Alibaba stake would help the e-commerce
company complete its funding for the Yahoo purchase.
Alibaba is also in talks with private equity firms that
would assist in funding the remaining $500 million, sources
said, including Bain Capital, Blackstone Group LP, and
Hony Capital.
Under the deal, Sunnyvale, California-based Yahoo and fellow
investor Softbank Corp of Japan agreed to cap their
voting rights in Alibaba at below 50 percent. Limiting outside
ownership was a major motivation for Alibaba Chief Executive
Jack Ma, a person close to Ma said.
In a round of talks that collapsed in February, Yahoo had
tried to work out a complex spin-off of Alibaba assets that
wouldn’t trigger a big tax bill. But that deal foundered on how
much value to assign Alibaba’s Taobao retail operation and on
how U.S. tax authorities would treat the manoeuvre.
Taobao, Alibaba’s crown jewel and virtual cash machine,
accounted for almost two-thirds of $2.8 billion group revenue in
2011. But it has come under fire over fake items sold on its
platform, and was last year placed on the United States Trade
Representative’s (USTR) notorious markets blacklist for offering
a wide range of goods that infringed copyrights.
The sources declined to be named because the discussions
were private. Alibaba, Blackstone, CIC and Hony all declined
comment. Bain could not immediately be reached for comment.
