CIC-Led Group Said to Pay $2 Billion for Alibaba Holding

Investors led by China Investment Corp. paid $2 billion to acquire a 5.6 percent stake in Alibaba Group Holding Ltd., the country’s biggest e-commerce company, according to a person with knowledge of the matter.

The group includes CIC International, Boyu Capital, CITIC Capital and China Development Bank, said the person, asking not to be identified because the details aren’t public. The parties were identified as investors in a Sept. 18 statement and the company isn’t providing details on the individual investments, Alibaba spokesman John Spelich said in an e-mail yesterday. Phone calls to CIC’s Beijing-based press office went unanswered.

Alibaba had said it paid $7.6 billion to complete a repurchase of a stake in itself that was held by Yahoo! Inc. (YHOO) and to amend its agreement. Alibaba said the financing package was the biggest private financing for a closely held Chinese company, and the largest non-leverage buyout private financing for a technology company globally.

The financing includes a mixture of cash on hand, senior debt and the sale of convertible preference and ordinary shares, the company said in its statement. The new equity financing was completed at a valuation of about $40 billion, it said. The convertible preference shares were sold to global institutional investors, Alibaba said.

Selling Shares

The company raised almost $4 billion selling ordinary and convertible preference shares, said another person, who didn’t identify the investors. The financing package includes a $1 billion loan from a syndicate of international banks and a $1 billion facility from China Development Bank, according to the person familiar with the matter, who asked not to be identified because the details aren’t public.

“Share issuance of $4 billion is large for this sector, but Alibaba’s Taobao platform is extremely strong and attracts a lot of excitement,” said Jim Tang, chief analyst at Shenyin Wanguo Securities Co. in Shanghai. “They are another Tencent or Baidu.”

Tencent Holdings Ltd. is China’s biggest Internet company, and Baidu Inc. is China’s biggest search engine.

Alibaba also paid $800 million from cash on hand and Yahoo also received $800 million worth of the Chinese company’s preference shares, the person said.

Alibaba bought back about half of Yahoo’s 40 percent stake for about $7.1 billion, which includes $6.3 billion in cash and $800 million in preference shares, the Chinese company said Sept. 18. It also paid Yahoo $550 million in cash in connection with changes in terms of a technology and intellectual-property licensing agreement.

Yahoo acquired about 40 percent of Hangzhou, China-based Alibaba in 2005 in exchange for $1 billion and ownership of Yahoo’s Chinese operations.

CIC, China’s sovereign wealth fund, was set up to improve returns on foreign-exchange reserves by investing overseas. The $482.2 billion fund’s holdings in China are largely limited to stakes in financial institutions for the government.

To contact Bloomberg News staff for this story: Philip Lagerkranser in Hong Kong at lagerkranser@bloomberg.net; Wendy Mock in Hong Kong at wmock3@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Shelley Smith at ssmith118@bloomberg.net

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CIC-Led Group Said to Pay $2 Billion for 5.6% of Alibaba Group

Nelson Ching/Bloomberg

Alibaba had said it paid $7.6 billion to complete a repurchase of a stake in itself that was held by Yahoo! Inc. and to amend its an agreement.

Alibaba had said it paid $7.6 billion to complete a repurchase of a stake in itself that was held by Yahoo! Inc. and to amend its an agreement. Photographer: Nelson Ching/Bloomberg