Chinese e-commence giant Alibaba Group has agreed to acquire a 33% equity stake in its payments arm Ant Financial, which operates Alipay.
Ant Financial was created after founder Jack Ma spun out Alipay from Alibaba in 2011 citing Chinese regulations.
The latest deal stems from a profit-sharing agreement signed between the two firms in 2014, which requires Ant to pay 37.5% of its pre-tax profits to Alibaba in royalty and technology service fees.
Under the new arrangement, Alibaba will purchase new shares in Ant in exchange for intellectual property rights owned by Alibaba related to Ant.
The e-commerce giant does not expect any cash impact from the transaction and will buy the stake through a Chinese domestic subsidiary.
The deal has already secured the go-ahead from a committee of non-executive Alibaba directors, most of whom are independent under NYSE rules. It is now subject to customary conditions.
Alibaba CEO Daniel Zhang said: “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.”