Chinese e-commerce conglomerate Alibaba Group has announced an agreement with Yahoo and Softbank regarding its third-party payment platform Alipay.
The agreement establishes the following:
- The existing relationship between Taobao and Alipay will be preserved. Alipay will continue to provide payment processing services to Alibaba Group and its subsidiaries (including Taobao) on preferential terms.
- Alibaba Group will license to Alipay certain intellectual property and technology and provide certain software technology services to Alipay and its subsidiaries. Alipay will pay to Alibaba Group, prior to a liquidity event, a royalty and software technology services fee, which consists of an expense reimbursement and a 49.9% share of the consolidated pre-tax income of Alipay and its subsidiaries.
- Alibaba Group will receive no less than USD 2 bln and no more than USD 6 bln in proceeds from an IPO of Alipay or other liquidity event. The exact proceeds to Alibaba Group will be determined by multiplying the total equity value of Alipay by 37.5%, subject to the foregoing floor and ceiling amounts.