China buys 'golden shares' in two Alibaba units

China buys ‘golden shares’ in two Alibaba units

BEIJING, China, Jan 13 (Reuters) – China has acquired minority stakes with special rights in two domestic units of tech giant Alibaba Group Holding Ltd (9988.HK), company registration records showed, as Beijing extends a campaign to strengthen control about content.

Beijing has been taking ‘golden shares’ in private online media and content companies for more than five years, and in recent years expanded such deals to companies with large amounts of data.

Bets made over the past four months on Alibaba units are the first to come to light for the e-commerce firm. Alibaba has been one of the most prominent targets of China’s two-year regulatory crackdown on tech giants.

These golden shares, typically equivalent to about 1% of a company, are purchased by government-backed funds or companies that gain board representation and/or veto rights for key business decisions.

Public company registration records showed that in September last year, an investment vehicle from state-owned Zhejiang Media Group acquired a 1% stake in Shanghai-based Alibaba’s Youku Film and Television unit.

Zhejiang Media Group has also appointed Jin Jun, general manager of one of its subsidiaries, to the board of the Alibaba unit, records show.

Separate business registration records showed that in December WangTouSuiCheng (Beijing), an entity under the China Internet Investment Fund (CIIF) established by the Cyberspace Administration of China (CAC), acquired a 1% stake in the unit. of Alibaba Guangzhou Lujiao, whose main focus is “research and experimentation”.

The Financial Times, which first reported the WangTouSuiCheng investment on Friday, said the goal of the investment is for Beijing to tighten control over content in the video streaming unit of e-commerce giant Youku and the browser. web UCWeb.

Alibaba did not respond to a request for comment.

The FT also reported, citing unnamed sources, that discussions were underway for the government to acquire golden shares in gaming giant Tencent Holdings (0700.HK), which would entail a stake in one of the major subsidiaries of the group. Tencent declined to comment.

Other firms that have such golden share deals include Full Truck Alliance Co (YMM.N), as well as the mainland subsidiaries of TikTok owner ByteDance, Kuaishou Technology (1024.HK) and Weibo, Reuters previously reported.

Holding such gold shares can be useful for companies when they try to obtain licenses to broadcast news online and show visual and audio programs online, sources told Reuters.

Reporting by Yingzhi Yang, Brenda Goh, and Josh Horwitz; Additional reporting by Rishabh Jaiswal and Mrinmay Dey; Edited by Uttaresh.V, Rashmi Aich and Kenneth Maxwell

Our standards: Thomson Reuters Trust Principles.

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