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Alibaba to reshape online finance

Xinhua | Updated: 2013-10-11 10:59

BEIJING - Alibaba's latest takeover of Chinese fund management firm Tianhong will inject new vitality into China's online finance market, analysts believe.

Zhejiang Alibaba E-commerce Co, the parent company of Alipay, China's biggest online payment platform, will buy 51 percent of Tianhong Asset Management Company, according to a statement released on Wednesday by Tianhong's shareholder, Inner Mongolia Junzheng Energy & Chemical Industry Co Ltd.

The statement said that Tianhong's registered capital will surge to 514.3 million yuan ($83.69 million) from its previous 180 million yuan through the fundraising round announced Wednesday.

This will make Tianhong the country's largest fund management company in terms of registered capital, surpassing that of China Asset Management Co, currently the largest with registered capital of 238 million yuan.

Zhejiang Alibaba will invest 1.18 billion yuan for 51 percent of Tianhong's registered capital to become the largest shareholder of the company.

Inner Mongolia Junzheng and Tianhong's management will also buy more of Tianhong's registered capital.

Shares of Inner Mongolia Junzheng soared to the daily trading limit of 10 percent on Thursday.

Tianhong will remain independent in its operations, and the company's name, registration place, structure and management will stay unchanged, Chen Liang, spokesman for Alipay, said Thursday.

"Alipay has some experience in the field of online finance, and we hope the takeover will bring more Internet elements and mindset to the traditional fund industry," Chen said.

In June, Alipay joined hands with Tianhong to create a wealth management product, called Yu E Bao, for users of Alipay to transfer their Alipay balance into a Tianhong money market fund.

The product soon attracted millions of users after its launch, as it offers an annualized yield of about 4.5 percent, higher than the one-year deposit rate of 3 percent offered by commercial banks.

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