Alibaba pays $7.6bn in Yahoo stake buyback Alibaba Group has bought back 20 per cent of its stock from Yahoo in a deal that values the Chinese ecommerce group at more than $40bn. Alibaba, valued at $2.5bn when Yahoo first invested in 2005, is now worth more than twice as much as the struggling US internet company. IN Asia-Pacific Companies After agreeing a deal in May that Yahoo would sell half of its 40 per cent stake, Alibaba has paid the US group $7.6bn, paying with debt and equity raised from an international consortium of investors and its own cash. China Investment Corporation, the sovereign wealth fund, led the equity portion of the financing, which comprised about $3.9bn of the total raised. The completion of the repurchase paves the way for an initial public offering by Alibaba, at which point it can buy back Yahoo's remaining stake. The transaction sees Yahoo receive $6.3bn in cash and $800m in Alibaba preference shares, plus another $550m to amend the companies" technology and patent licensing agreement. Jack Ma, Alibaba's chairman and chief executive, said the deal "begins a new chapter" in the relationship between the two groups, which began when Jerry Yang, Yahoo's co-founder, invested $1bn seven years ago. "I look forward to working with Marissa Mayer and her team in our continued partnership," Mr Ma said. Marissa Mayer, who took over as Yahoo's chief executive in July, is considering whether to return $5bn of the proceeds to shareholders, as her predecessor had promised, or to use it for acquisitions or restructuring. Alibaba said that its equity financing was completed at a valuation of about $40bn, above May's suggested $35bn valuation. It was led by CIC International, Boyu Capital and Citic Capital, two Chinese private equity firms, and CDB Capital, the equity investment arm of China Development Bank. Silver Lake, DST Global and Temasek, who were among those to invest $2bn a year ago to provide liquidity to Alibaba's existing investors and employees, increased their investment as part of the deal. A consortium of eight international banks, including Barclays, Citigroup, Credit Suisse and Deutsche Bank, provided $1bn in senior debt financing, while another $1bn was provided by China Development Bank. Alibaba suggested that the private financing was China's largest for a pre-IPO company. The fundraising began just before Facebook's troubled stock-market debut and was completed at a higher valuation than initially expected, despite several US internet companies, such as Groupon and Zynga, seeing their stock prices tumble. In February, Alibaba reported 2011 results showing a 23 per cent rise in earnings per share to HK$0.41 (5.2 US cents) on earnings before interest, tax and amortisation of Rmb1.9bn (US$306m), up 22 per cent. Yahoo's shares rose less than 0.5 per cent to $15.74 in late morning trading in New York.