Alibaba restructures agreement with Alipay ahead of IPO

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China’s largest e-commerce company Alibaba Group Holding Ltd has restructured its agreement with Alipay inorder to maximise its potential gain ahead of an expected IPO later this year.

Alibaba has also sold its SME loans business to Alipay’s parent company, Small and Micro Financial Services, for $518 million.

Alipay was previously part of Alibaba’s corporate structure but following new payments business licensing regulations from Beijing, it was placed under separate ownership in 2011.

The new agreement also lifts a $6 billion cap, under certain conditions, on funds that Alibaba could receive if Alipay or its parent company go public. The sale means the financial-services assets will be owned by Chinese nationals instead of the global investors that may buy shares in the IPO.

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