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Alibaba Raises Its Stake in China International Capital

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Feb. 21 2019, Published 8:24 a.m. ET

Alibaba raises stake in CICC

Alibaba Group Holding (BABA) has reportedly invested another 1.81 billion Hong Kong dollars (or $230.61 million) to expand its stake in local investment bank CICC (China International Capital). China’s e-commerce giant already bought 117.1 million of the Hong Kong–listed shares for 15.50 Hong Kong dollars on February 14.

On February 19, Alibaba raised its investment and expanded its stake in CICC to ~11.74% from roughly 5% earlier, which means that Alibaba is now the second-largest shareholder in CICC. Tencent Holdings (TCEHY) holds the largest stake in the investment bank at 12.01%. Overall, Alibaba currently owns 4.84% of CICC’s total equity.

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CICC

CICC is an investment house and has been making efforts to expand its business and shift its focus to wealthy individuals, as it wants to reduce its dependence on investment banking fees. CICC entered into the retail investor market with the purchase of China Investment Securities in 2017. CICC now has two strong Internet giants as its investors, which could help it to gain more access to their user data and advanced technology as it pursues new growth areas. Alibaba’s investment in CICC will also complement its business strategy and is expected to help it to execute deals and financial transactions globally.

Booming fintech sector

In China, many tech companies are aggressively teaming up with traditional financial institutions to expand into the booming fintech (financial technology) industry. According to a report from accounting company Ernst & Young, China is leading in the fintech adoption rate. Around 69% of users in China have used fintech services, followed by India (INDA) at 52%, the United Kingdom (EWU) at 42%, and Brazil (EWZ) at 40%.

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