Alibaba pumps more money into CICC investment bank
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Alibaba pumps more money into CICC investment bank

Chinese ecommerce titan Alibaba has increased its stake in prestigious investment bank China International Capital Corp (CICC). According to early reports, the company is paying “about” $230 million to own a bigger share of CICC. That share now comes in at around 11.7% - almost as much as arch-rival (and fellow Chinese tech titan) Tencent’s 12% stake. Analysts have cheered the move, suggesting CICC could be a useful strategic asset for Alibaba going forward.

Alibaba’s share price has appreciated by 24% so far in 2019

22 02 19 alibaba

Source: Yahoo Finance

Richard Cao, an analyst based in Shenzhen with Guotai Junan Securities Co., said: “Its strength as a boutique investment bank is unparalleled domestically. It will be a good complement to Alibaba, which is doing many deals and can use a lot of advisory service. The purchase serves Alibaba’s business strategy.”

Another way to look at this is the next evolution of the war between Alibaba and Tencent, which continues to ramp up. They’re the country’s two most valuable companies, and they compete on a variety of fronts, from food delivery to financial services. Recently, it’s gotten to the point where Alibaba affiliate Ant Financial has been making banks it works with sign “very restrictive non-compete” agreements that forbid them from working with Tencent or one of its myriad corporate entities.

However, in an Alibaba statement, Tencent was (unsurprisingly) an absent friend. The company said that the CICC deal builds on numerous years of cooperation between the two companies, and that further investment with help the duo “provide more innovative and more comprehensive products and services to customers.” A spokesperson for CICC added that the bank always values lomng-term investment.

Disclosure

Dominion holds Alibaba in its Global Trends Ecommerce Fund.


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