Report: CIC Seeks $2 Billion Stake in Alibaba, Helping It Pay Off Yahoo

China Investment Corp (CIC), the sovereign wealth fund that has over US$410 billion in assets, is reportedly on the verge of buying up a $2 billion stake in local e-commerce giant Alibaba Group. This opportunity comes due to the imminent Alibaba repurchase of 20 percent of Yahoo’s stake, which was agreed upon earlier this week.

Reported by Reuters this afternoon as being at the stage of “advanced talks” between CIC and Alibaba, the major new slice of action could be crucial in helping Alibaba with its Yahoo deal. To raise the requisite $7 billion to buy back its own milkshake, Alibaba – which runs popular online shopping sites such as Taobao – is raising $4.6 billion of that from issues of preferred shares, some bank loans, and also offering larger stakes to existing shareholders. Chief among those are Singapore’s Temasek Holdings, and DST Global. The rest it can pay off from splashing some of its cash reserves.

While the Yahoo-Alibaba deal over this portion of its stake is expected to take six months to complete, in the interim we can expect to see a lot of cash and equity changing hands among Alibaba, CIC, Temasek, and DST. Reportedly, some private equity firms have been contacted by the Hangzhou-based e-commerce company to assist with some of the remaining funding that won’t come from shareholders or loans. Among those is Bain Capital, the vulture venture capital firm co-founded by Mitt Romney, the US presidential challenger to Barack Obama this year.

We’ll update if this CIC stake is confirmed officially.

[Source: Reuters]