Alibaba registers one-time gain of $9.7bn upon receipt of equity interest in Ant Financial

The financial report of Alibaba Group Holding Limited (NYSE:BABA) for the quarter to end-September 2019 is out, with the results showing that the earnings have been significantly affected by the recent deal with Ant Small and Micro Financial Services Group Co., Ltd.

During the quarter to September 30, 2019, Alibaba registered net income attributable to ordinary shareholders of RMB72,540 million (US$10,149 million), and net income of RMB70,748 million (US$9,898 million), which included a significant one-time gain recognized upon the receipt of the 33% equity interest in Ant Financial.

On September 23, 2019, Alibaba became a 33% equity stakeholder in Ant Financial. Alibaba recognized a one-time gain of RMB69.2 billion (US$9.7 billion) upon the receipt of the equity interest in Ant Financial. With this equity stake, the profit sharing arrangement under which Alibaba received 37.5% of Ant Financial’s pre-tax profits has terminated.

Alibaba notes that Ant Financial has expanded its user base and business scale by building a unique value proposition through its ability to offer comprehensive financial solutions, including digital payment and digital finance services. As of June 30, 2019, annual active users of Alipay and its local e-wallet partners increased to approximately 1.2 billion globally, of which about 900 million were users from China.

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.