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Will Alibaba Reclaim Its Stake In Alipay?

After spinning the payments wing of the company, Alipay, off in 2011 to more successfully navigate regulatory issues within the Chinese government bureaucracy, Chinese e-commerce giant Alibaba is reportedly in talks to reclaim a large portion of its lost stake in its erstwhile payments section.

Alipay processes Alibaba’s  e-commerce payments in much the same way PayPal handles transactions on eBay. It also controls China’s largest money-market fund, with assets of $87 billion. Re-acquiring a larger stake in the company will likely drive up Alibaba’s value, particularly attractive now as the company is pushing toward an estimated $20 billion U.S. IPO.

Alipay is today controlled by a company in which Alibaba founder and CEO Jack Ma has a 46 percent stake.  Re-acquisition by Alibaba would lessen Ma’s direct control, as he is only a 7 percent owner in Alibaba.

The talks are still in early phases, changing the ownership structure is “still only a concept at this point, and there is no timeline,” notes a source familiar with the situation, reports The Wall Street Journal. 

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