Giant Interactive's sale of Alibaba shares values e-commerce company at $128B

By VCPOST Staff Reporter

Feb 12, 2014 05:56 PM EST

China's Alibaba Group Holding Ltd. may have a valuation of about $128 billion based on calculations following a recent stake sale in the e-commerce company, Reuters said in a report.

According to the report, Alibaba is expected to list later this year in what would be the world's biggest initial public offering since social media site Facebook Inc. went public in 2012. All eyes are on the potential value of Alibaba and its IPO as investors seek to take advantage of China's booming online retail sector. 

Eight analysts had estimated Alibaba's enterprise value to be at around $140 billion, whereas the value of its forthcoming IPO at $15 billion, Reuters said. 

Shanghai-based video game company Giant Interactive Group Inc. on Tuesday announced that it had put up for sale a stake in Alibaba for about $199 million. Giant Interactive said that the stake will be sold to a fund of investment firm Tiger Global Management LLC, but did not say any further details, the report stated. 

In 2011, Giant Interactive acquired a stake in Alibaba for $50 million through Chinese private equity firm Yunfeng Capital. Alibaba executive chairman Jack Ma was a co-founder of Yunfeng Capital, Reuters said. 

Around that time, a consortium led by private equity firms Silver Lake Partners, Yunfeng Capital and DST Global picked up a 5% stake in Alibaba in a deal worth $1.6 billion. The e-commerce company was then valued at roughly $32 billion, the report said. 

Reuters said that supposing Giant Interactive's stake remained the same since 2011, it is now worth about four times its original investment. Subsequently, Alibaba's valuation would have swelled to $128 billion. 

Giant Interactive said that it is exiting its stake in Yunfeng E-Commerce Funds to a fund controlled by Tiger Global. Tiger Global also holds a 22.1% stake in Alibaba rival and China's No. 2 e-commerce company,, the report said.  

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