Chinese retailer Suning’s founder pledges all his shares to Alibaba’s Taobao

The pledge amounts to a total of 100,000 shares that are worth 1 billion yuan (US$153 million). A large part of these shares – 51,000 – will come from the group’s founder Zhang Jindong.

He also pledged 65,000 shares in the group’s subsidiary, Suning Real Estate, to Taobao.

However, the report did not disclose the total percentage of Suning’s shares that are pledged to Alibaba’s Taobao.

Promoters of companies use pledging of shares as an options to secure loans to meet working capital requirement, personal needs and fund other ventures or acquisitions. They use the shareholding in a company as collateral to avail a loan.

In 2015, Alibaba invested US$4.6 billion in the retail group for a 19.99% stake, while Suning in turn invested US$2.1 billion to acquire 1.1% in the ecommerce giant.

Following the new development, the share of Suning.com sunk to 8.03 yuan (US$1.2) in the morning of Friday, the lowest price since September 2014, the report said.

After the deal materializes, the Ningjing-based group would retain a 3.98% stake in its core asset, Suning E-buy.

The move comes after the group raised US$915.5 million in investment for its newly established ecommerce platform Yunwang Wandian earlier this month.

Suning is well known as an offline-to-online retail service provider in China, selling consumer electronic products and home appliances.