Share Price of Alibaba Drops After Taking a Stake in Ant Financial

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Alibaba, the tech giant from China, has unveiled that the company is taking a stake in Ant Financial. However, investors in the firm are not best pleased.

Shares in the New York-listed company were down by more than three percent during pre-market trading following the announcement of the plan to take a 33 percent equity stake in Ant Financial.

Ant Financial began life as AliPay and in 2011, it spun out of Alibaba. The two presently have an agreement on profit sharing.

“This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere,” stated, Daniel Zhang, the chief executive of Alibaba.

“Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience.”

Ant Financial is anticipated to IPO, even though a time frame is yet to be established. Last month, it had its takeover of MoneyGram scuppered by regulators in the United States.

Meanwhile, a 56 percent increase in revenue to $12.8bn during the third quarter to the end of December was reported by Alibaba slightly ahead of forecasts. And income came in at $3.6bn, an increase of 36 percent on the same time from the previous year.