The Alibaba Group, the Chinese e-commerce giant on the cusp of going public in the United States, is in talks with its Alipay payments affiliate about regaining a stake in the business, a person briefed on the matter said on Wednesday.
The two sides have been in discussions for nearly a year and a half, and no agreement is imminent, this person cautioned. Any pact would almost certainly be reached after Alibaba completes its initial public offering, which is expected to be one of the biggest ever.
And such a deal would still need to pass muster with the Chinese government, which has set out rules over foreign ownership of financial institutions.
Still, the prospect that Alibaba could again be formally reunited with its payment division would be of great interest to the Chinese Internet titan’s future shareholders.
Though technically a separate company, Alipay processes Alibaba’s e-commerce payments. It also houses Yu’E Bao, a money-market fund that now claims more than $80 billion worth of assets.
How the two came to be separate entities is a matter of some controversy. Three years ago, Alibaba’s founder, Jack Ma, split off Alipay in what he said was a way to stay compliant with government rules concerning foreign ownership of financial institutions. Yahoo, Alibaba’s biggest investor, complained, setting off a monthslong row that was eventually settled.
As part of that agreement, Alipay agreed to pay its onetime parent between $2 billion and $6 billion should it go public. Under the contours of one proposal currently being discussed between the two, Alibaba would receive a direct stake in the payments processor, potentially worth one-third of the company.
Mr. Ma currently owns just under 50 percent of Alipay, a stake several times larger than what he has in Alibaba itself. Other co-founders of Alibaba also own shares in the payments company.
A representative for Alibaba declined to comment. News of the discussions was reported earlier by The Wall Street Journal.
