Alibaba Group acquires 33% stake in Ant Financial

Maria Nikolova

Upon closing of the issuance, the profit-sharing arrangement under which Ant Financial paid fees amounting to 37.5% of its pre-tax profits to Alibaba Group was terminated.

Alibaba Group Holding Limited (NYSE:BABA) and Ant Small and Micro Financial Services Group Co., Ltd. have announced a deal that is reiterating the connection between the businesses. Alibaba Group has received a newly-issued 33% equity interest in Ant Financial following the satisfaction of the closing conditions set forth in the 2014 transaction agreements and the relevant amendments to those agreements.

Upon closing of the issuance, the profit-sharing arrangement under which Ant Financial previously paid fees amounting to 37.5% of its pre-tax profits to Alibaba Group was terminated.

The deal once again connects two major technology businesses in China and comes as Jack Ma stepped down from his role as Chairman of Alibaba, the company he founded.

Ant Financial was spun out of Alibaba in 2011, when the e-commerce giant separated its Alipay payments platform from the other operations of the company. Alipay was established in 2004 to offer a trustworthy payment system for Alibaba’s e-commerce site Taobao.

According to estimates provided by Nikkei Asian Review, Ant Financial is highly profitable and contributed about $237 million in royalty and software service fees to Alibaba in the quarter ended June 30 under the profit-sharing arrangement.

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