BEIJING The online payment affiliate of dominant Chinese e-commerce company Alibaba Group is taking control of Tianhong Asset Management Co to accelerate its push into online financial services.
Tianhong shareholder Inner Mongolia Junzheng Energy & Chemical Industry Co said on Wednesday the investment of 1.18 billion yuan ($192.8 million) gives Zhejiang Alibaba E-Commerce Co, the parent company of online payment company Alipay, 51 percent of Tianhong.
Alipay and Tianhong launched a new fund and payment platform - called Yu E Bao, or "leftover treasure" in Chinese - in June to help Alipay customers convert spare cash into a money market fund holding.
In its first 18 days, the fund attracted more than 2.5 million customers and raised 6.6 billion yuan ($1.08 billion), according to Tianhong, and is expected to be one of the most successful mutual funds in China this year.
Alibaba, which is expected to file for an IPO in New York next year that could value it at more than $100 billion, has been leading the drive by local internet companies into highly regulated financial services.
"Tianhong and Alibaba are mutually complementary," Ding Xuemei, a spokeswoman for Tianhong, said in a telephone interview.
"Alibaba is very experienced in the Internet and we are very experienced in investment management. We partner up for a better prospect in internet finance."
Tianhong's management will not change, Ding said.
Alibaba bought its Tianhong stake through a fundraising exercise that saw Tianhong's registered capital more than double to 514.3 million yuan from 180 million yuan.
"In order to give investors in Yu E Bao more security, improve innovation and provide more products and services, we have chosen to cooperate with Tianhong Asset Management," Alipay said on its official Sina Weibo microblog.
Alipay is China's biggest third-party payment platform, providing payment solutions to 460,000 merchants and with 800 million registered accounts.
Customers can invest as little as 1 yuan ($0.16) in the Yu E Bao service and can withdraw their money and return it to their Alipay accounts at any time. ($1 = 6.1211 Chinese yuan)
(This version of the story adds a dropped word in headline.)
(Reporting by Paul Carsten, Matthew Miller and Beijing Newsroom; Editing by Jonathan Standing and David Cowell)