uploads/2018/08/3.jpg

JD Is Buying a Smaller Stake in Allianz

By

Updated

JD poised to own 33% of Allianz China

China recently cleared JD.com (JD) to purchase a large equity stake in the Chinese subsidiary of global insurance company Allianz SE. JD’s plan to invest in Allianz China was revealed in April, and at that time it was said JD would invest around $85.4 billion for a 33.0% stake in the business.

However, it now seems that JD is purchasing a slightly smaller piece of Allianz China. According to a notice published by China’s banking and insurance regulator, JD has been cleared to invest about $71.1 million for a 30.0% stake in Allianz China.

Article continues below advertisement

Investment to pave the way for collaboration

Despite the stake that JD has been cleared to purchase in Allianz China is slightly smaller than what was stated previously, JD is still poised to be the second-largest shareholder in the insurance business once the transaction closes. The top shareholder in Allianz China is Allianz SE, its German-based parent.

The investment in Allianz China is expected to pave the way for JD to launch a digital insurance program for its customers who shop online. JD has partnered with Alphabet’s (GOOGL) Google to help extend its overseas e-commerce reach. JD’s annual revenues hit $55.7 billion in 2017.

China’s Internet companies expanding in the finance sector

The partnership with Allianz China is also expected to create an avenue for JD’s finance subsidiary, JD Finance, to expand its financial offerings. JD Finance’s current financial services include extending loans and managing assets for clients.

Alibaba (BABA), one of the leading Chinese Internet companies, is also involved in the financial services business through its Ant Financial affiliate. In 2016, Ant Financial bought a controlling stake in Cathay Century Insurance to allow it to expand in the insurance sector. However, Ant Financial’s attempt to accelerate international expansion suffered a blow early this year after the United States blocked it from acquiring global money remittance company MoneyGram (MGI) for $1.2 billion.

Last year, Tencent (TCEHY), another leading Chinese Internet company and a JD backer, was cleared to offer insurance services through its WeChat app.

Advertisement

More From Market Realist