Why Alibaba highlighted these 5 companies during Investor Day

Alibaba has divested from more than 50 companies since its initial public offering in 2014, amounting to 18 billion yuan (US$2.5 billion) in gains, according to a presentation delivered by Maggie Wu, chief financial officer of Alibaba, during the company’s Investor Day on September 23 and 24.

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Alibaba invests mainly to achieve unrivalled growth, gain efficiency, and invest for the future, the presentation slides posted on Alibaba’s official website shows.

Alibaba invests more for synergy effects to its ecosystem than for financial returns, according to 21st Century Business Herald, citing Wu’s comments on a summary of the same presentation. Wu added that when investees no longer provide much strategic value for Alibaba, the company will just divest from them.

Nonetheless, at the Investor Day, she named 10 companies Alibaba has successfully exited, highlighting their positive financial returns. Here are five of the companies Wu mentioned.

DAS-security

In November 2015, one of Alibaba’s venture capital vehicles invested 15.5 million yuan (US$2.2 million) into Hangzhou-based cybersecurity solution provider DAS-security, which is also known as DBAPP Security Co. Ltd., according to latest IPO prospectus updated on June 26 by DAS-security.

The prospectus did not disclose Alibaba’s stake right after the investment but stated that after a registered capital enlargement from the company in January 2016, Alibaba had a 34.46% stake.

In September 2017, Alibaba transferred part of its shares in DAS, which represented 7.5 million yuan, or 48.4% of the money it poured in the company, to six other investors. This divestment allowed Alibaba to get back 205.5 million yuan, representing a more than twelvefold investment return in less than two years, according to KrAsia‘s calculation on all transactions.

Alibaba will still hold a 10.81% stake in the company after the IPO, which is around the corner, via the Star Market of China’s Shanghai Stock Exchange.

DAS also said in the latest prospectus that the company has business relations with companies in Alibaba’s ecosystem but this represents a very minimal percentage of its entire business, indicating that even if Alibaba exited from the company entirely after the IPO, the withdrawal would have very little impact on the company’s business operation.

Snapchat

Alibaba invested US$200 million in photo-messaging app Snapchat in March 2015, valuing the Los Angeles-based company at around US$15 billion, according to Reuters.

Snapchat went public two years later, raising US$2.4 billion in net proceeds from its IPO. However, Alibaba did not show up on the company’s final prospectus.

It is hard to tell when Alibaba exited Snapchat from the public information currently available.

Enlight Media

Beijing-based film company Enlight Media disclosed in a filing on September 2 that its stockholder, one of Alibaba’s VC investment arms, planned to sell up to 58.7 million shares 15 trading days after the announcement over the next six months, accounting for no more than 2% of the company’s entire shares.

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