Rumor: China's Third-Party Payment Firms Cut Overseas Ties

Oriental Morning Post, 5/13/11

A number of third-party payment processors applying for licenses from the People's Bank of China (PBoC), such as Tencent's (0700.HK) Tenpay, YeePay, 99Bill, and Lakala, are cutting ties with foreign investors, according to an industry source. This follows recent news of Alibaba Group's transfer of Alipay to an affiliate company, owned by CEO Jack Ma, because of Yahoo's role as a minority shareholder in Alibaba Group.

South African digital media conglomerate Naspers is a minority shareholder in Tencent, while 99Bill previously received VC funding from Doll Capital Management, Peninsula Capital and other overseas venture capital firms.

A spokesperson for YeePay said that the company has only received domestic funding.

Lakala Chairman and President Sun Taoran said that the company has already "bought" back its shares held overseas at an inflated price as part of its PBoC application for a payment license. Following the transfer of ownership, Chinese laptop, PC, and handset manufacturer Lenovo (0992.HK) now holds more than 50% of shares, making it Lakala's de facto owner. The percentage of shares held by Sun himself has dropped from 12.88% to 9.9%, and Morningside Ventures and other previous overseas venture capital investors relinquished all their shares in the transaction.

Global third-party payment platform Paypal is not listed as a license applicant on the PBoC website.

Editor's Note: For other related premium content in today's issue of the Marbridge Daily, please see the following:

Yahoo: Alibaba Did Not Reveal Alipay Restructuring in 2010

Rumor: Zhejiang Alibaba Acquired Alipay for RMB 330 Mln

Rumor: PBoC to Issue Payment Licenses on May 23

Keywords: regulation M&A Sun Taoran Lenovo Internet license 99Bill Alipay Lakala PayPal Tenpay YeePay Tencent People's Bank of China Doll Capital Management Morningside third-party payment 0700.HK 0992.HK Naspers Alibaba Group