Alibaba share price up, continues on its acquisition spree after record IPO

Only one workweek after Alibaba Group Holding Ltd raised $25 billion in the worlds biggest Initial Public Offering, the Chinese e-commerce giant continued on its expansion push, giving no sign of slowing momentum. The company announced a stake purchase in a Chinese high-tech company, while also preparing to open its own private Chinese bank and holding talks with Hong Kong authorities to start a local version of its immensely popular Yu’E Bao money market fund.

Alibabas first major acquisition deal is now at hand as the e-commerce company reported it will spend around $457 million to purchase a 15% stake in Beijing Shiji Information Technology – a firm which provides hotels with technology software and services. Tying with the software company will benefit Alibabas travel-booking business, called Taobao Travel, which enables visitors of its platform to book hotels, plane tickets and package tours.

The acquisition will also be beneficial for Alibabas strategy to connect its online and mobile services with traditional “street-side” businesses, as the companys Paypal-like payment service, dubbed Alipay, allows customers to pay for various offline services, such as in restaurants and taxis.

The investment in Beijing Shiji is the latest in a series of acquisitions as the e-commerce behemoth expands its push for new customers, having already purchased a mobile game developer, a film studio and an online video company, among others.

Meanwhile, Alibaba also received an approval by Chinas banking regulator on Monday to found its own private bank, the companys latest push into financial services. Alibaba will hold a 30% stake in the bank that is about to be set up through Zhejiang Ant Small & Micro Financial Services Group, an affiliate which holds the e-commerce giants financial services arm.

The bank should take six months to be established and other partners will hold the remaining 70% of ownership. Fosun International Ltd will have a 25% stake through its subsidiary Shanghai Fosun Industrial Technology, Ningbo Jinrun Asset Management will hold 16%, while a subsidiary of Wanxiang Group will own 18%. Other shareholders will be audited by the Zhejiang banking regulator.

Alibabas push into banking comes after the company set to create a 1-trillion-yuan ($163-billion) loans marketplace, a service which already has expanded to 14 billion yuan.

Alibaba was also reported to be exploring the opportunity to start a Hong Kong version of its popular Chinese money market fund Yu’E Bao, which pays much higher return on yuan deposits than conventional accounts. Alibaba is in talks with the Hong Kong Monetary Authority to receive authorization of launching a local version of its money market fund, which has already attracted more than $90 billion since it was launched in China in June 2013.

Alibaba intends to invest the collected funds in the mainland to yield higher returns, which it advertises will be 4%, compared to the currently available 1%.

Fulfilling its plan would require Alibabas financial unit to receive a banking license in Hong Kong, while also acquiring mainland authorities approval to take in money from the offshore renminbi market and send it back to China.

Ming Shu, who is responsible for micro finance and SME finance for Alipay, said for the Financial Times: “We are hoping to introduce it by early next year. And if we can send the money back to China, we can make a big difference. We are pushing hard.”

Alibaba Group Holding Ltd rose by 1.73% on Friday in New York to close the week 3.5% lower at $90.46 per share. According to CNN Money, the 7 analysts offering 12-month price forecasts for Alibaba Group Holding Ltd have a median target of $95.00, with a high estimate of $125.00 and a low estimate of $75.00. The median estimate represents a +5.02% increase from the last price of $90.46.

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