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Alibaba share sale values the China e-commerce firm at $128 billion

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo. REUTERS/Stringer

By Paul Carsten

BEIJING (Reuters) - A rare sale of a stake in Alibaba Group Holding (IPO-ALIB.N) values China's dominant e-commerce company at around $128 billion, Reuters calculations show.

Alibaba is expected to go public later this year in the world's biggest listing since Facebook Inc's (FB.O) debut in 2012 and the potential value of the firm and its IPO are a key focus for investors keen to cash in on China's booming online retail market.

A recent Reuters poll of eight analysts had put Alibaba's market value at around $140 billion and the value of the IPO at $15 billion.

Chinese video game company Giant Interactive Group (GA.N) said on Tuesday it is selling a stake in Alibaba to a Tiger Global fund for roughly $199 million but did not disclose further details.

Giant Interactive bought a $50 million stake in Alibaba in 2011 through Yunfeng Capital, a China-based private equity firm co-founded by Alibaba Executive Chairman Jack Ma.

Around that time, Alibaba was valued at around $32 billion after a private equity consortium led by Silver Lake (SILAK.UL), Yunfeng Capital and DST Global bought a 5 percent stake for $1.6 billion.

Assuming that Giant's stake has not changed since 2011, it is now worth roughly four times its original amount and Alibaba's value would have correspondingly increased to $128 billion.

The IPO has suffered some delay as Alibaba has struggled to reach an agreement with Hong Kong regulators over a partnership structure it hopes to use as part of the IPO. The location of the listing has yet to be decided.

Giant Interactive said it is selling its holdings in Yunfeng E-Commerce Funds to a fund owned by Tiger Global Management LLC.

Tiger Global also owns a 22.1 percent stake in Alibaba's main Chinese e-commerce rival JD.com, according to a JD.com filing. JD.com, China's second-largest e-commerce company formerly known as Jingdong and 360Buy, filed for a U.S. listing in January.

(Additional reporting by Stephen Aldred and Elzio Barreto in HONG KONG; Editing by Edwina Gibbs)