Alibaba Revises Pact with Alipay Parent Company Small and Micro

Chinese e-commerce giant Alibaba Group Holding, which is preparing for a US floatation, has revised a pact with the parent of its payments affiliate Alipay, to take home a bigger share of earnings.

Alibaba and Alipay parent Small and Micro Financial Services have agreed to do away with a $6bn (£3.6bn, €4.5bn) limit on Alibaba's share of proceeds if Small and Micro is sold or goes public, according to an amended Alibaba regulatory filing.

The deal was revised on 12 August, according to the securities filing, and gives Alibaba 37.5% of the pretax income value of Small and Micro. The Chinese firm previously received 49.9% of Alipay's pretax income.

Alibaba, which is expected to list itself on the NYSE later this year, also agreed to sell its small and medium enterprise loan business for $518m cash to Small and Micro.

Alibaba shareholder Yahoo, which holds about a one-fifth stake in the Chinese firm, could reap big gains from the overhauled agreement with Small and Micro.

"We support this restructuring and believe it is beneficial to Alibaba and, consequently, its shareholders," Yahoo said, reported the Wall Street Journal.

Alibaba IPO

Investors will have to wait until September 2014 to buy into the US public offering, Wall Street Journal reported in July.

Alibaba's planned New York listing is expected to help the company raise in excess of $20bn.

Pricing

Alibaba could price its forthcoming IPO at nearly 22% below analyst valuations, a survey of estimates showed in July.

The firm could affix the IPO value at $154bn, according to the average estimate of five analysts polled by Bloomberg.

The same analysts also pegged the firm's post-listing valuation at $198bn.