Alibaba Ramps Up Stake In Loss Making Tour Agency; Goes Cautious Amid Antitrust Action

E-commerce giant Alibaba Group Holding Ltd BABA invested 240 million yuan ($37.8 million) to double its stake in a loss-making local tour agency, SCMP reports.
Subsidiary Alibaba (China) Technology Co will double its stake in Shenzhen-listed UTour Group Co from 5.02% to 11.06% by buying shares from Chair Feng Bin and Deputy Chair Guo Hongbin.
At 4.41 yuan each, the price is half the 8.46 yuan per share that Alibaba paid for its initial 5% stake in the company in September 2020. Now Alibaba will be the second-largest shareholder after Feng.
In 2018, Alibaba and its affiliates invested a record sum of 198 billion yuan in 117 deals.
Contrastingly, in the first seven months of 2021, Alibaba – excluding its affiliates invested 20.8 billion yuan in 22 deals.
The deals included investments in community group buying start-up Nice Tuan and Chinese power bank rental firm Energy Monster and a $350 million investment in Turkish e-commerce firm Trendyol Group.
Fourteen of Alibaba's investment projects had Alibaba as the sole investor. At the same time, half were considered "strategic" due to their long-term impact on its future development.
Social media and gaming giant Tencent Holdings Ltd TCEHY completed 163 deals worth a combined 93.1 billion yuan in the first half of this year.
The New York- and Hong Kong-listed company has been "cautious and conservative" in this year's investments, Qichacha said.
"Alibaba tends either to let money flow to mature projects, investing huge amounts to gain more say in the projects; or it prefers to invest in projects that help it replicate the business that it was best at, especially overseas," said Xia Qiong, an analyst at Qichacha.
The slower pace of external investments follows Alibaba's critical organizational changes amid antitrust probes in the past few months.
Price Action: BABA shares traded lower by 0.21% at $124.17 in the premarket session on the last check Friday.

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