An investment group led by Yunfeng Capital, Silver Lake and Digital Sky Technologies Global, and Singaporean investment fund Temasek Holdings has agreed to invest $1.6 billion in China-based Alibaba Group Holding, China’s largest e-commerce group.
Yunfeng Capital, includes Alibaba Chairman Jack Ma as one of its founders. Hangzhou-based Alibaba operates China’s largest e-commerce website.
The investment would give Alibaba an enterprise valuation of around $32 billion. “They (Alibaba employees) are anxious for some sort of IPO, so it’s wise of Jack Ma to give these guys some liquidity,” said Michael Clendenin, managing director of Shanghai-based technology consultancy RedTech Advisors.
“This doesn’t add investment to Alibaba because Alibaba doesn’t need it. It’s just a swap that certainly takes pressure off IPO in the near term.”
Reuters Melanie Lee has reported: “The move may also help Ma in his quest to buy back a portion of all of Yahoo Inc’s stake in his company as Silver Lake was reportedly considering a bid for Yahoo.”
“Silver Lake is looking at Yahoo as a buyout target so to be closer to Jack and really see what he’s thinking makes a lot of sense. They may want to know what Jack be willing to pay for a part of Yahoo’s stake in Alibaba,” Clendenin said.
It was reported earlier this month that Silver Lake may be considering a bid for Yahoo. The Yahoo’s Asian assets, which includes it’s 40 percent stake in Alibaba, would make it an easier acquisition target. Yahoo is currently worth about $17 billion, has had a tumultuous relationship with Ma under its former chief executive Carol Bartz. Japanese technology company Softbank Corp also owns about 30 percent of Alibaba Group.
This latest move seems to be aimed at increasing liquidity options for employees.
“This liquidity program will allow our people to focus on growing our business and continuing to create value,” Ma said in a statement. “We believe the high-quality investors making commitments to this important program share our mission and philosophy, and we welcome them as shareholders of the company.”
Investors in Yunfeng Capital include, Chinese sportswear maker Dongxiang Group, with $100 million, and Chinese online game developer Giant Interactive will also invested $50 million.
Alibaba Group also operates Taobao and Taobao Mall. Alibaba.com shares rose as much as nearly 7 percent on the news before closing up 2.8 percent.