China's e-commerce giant Alibaba announced Thursday that it will acquire a 33 percent equity interest in Ant Financial, which provides mobile payments, lending and credit services.
The companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5 percent of its pre-tax profits to Alibaba, according to the press release.
Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial.
"An equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience," said Daniel Zhang, Chief Executive Officer of Alibaba Group.
Alibaba will acquire the equity interest in Ant Financial through a Chinese domestic subsidiary.
Ant Financial Services Group is focused on serving small and micro enterprises, as well as individuals. Brands under Ant Financial Services Group include Alipay, Ant Fortune, Zhima Credit and MYbank.