News this week: Alibaba Group Holding Limited has come to an agreement with its two largest shareholders, Yahoo and SoftBank, over the future of the Alibaba Group’s involvement in Alipay, whose ownership was transferred to a company controlled by Alibaba Group chairman and CEO Jack Ma earlier this year.
As part of the agreement, the Alibaba Group will continue to maintain an active role in Alipay and will be compensated between US$2 billion to US$6 billion in the event of an Alipay IPO. The exact amount will be calculated at the time of the listing by assigning the Alibaba Group a 37.5% share of the total equity value of Alipay. Alipay will also continue to provide payment processing services to all subsidiaries of Alibaba Group “on preferential terms”.
The Alibaba Group has agreed to license Alipay certain intellectual property and technology and provide certain software technology services to Alipay and its subsidiaries. The company’s press release reports that Alipay will pay Alibaba Group, prior to a listing or “liquidity event”, a royalty and software technology services fee, which will consist of an expense reimbursement and 50% share of the consolidated pre-tax income of Alipay and its subsidiaries.
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