Jack Ma's firm buys into financial software company

A company in which Chinese e-commerce billionaire Jack Ma Yun owns 99 percent of has agreed to buy a 20.62 percent stake in the country's leading financial software company Hundsun Technologies Inc for 3.3 billion yuan ($531.3 million) in cash, Shanghai-listed Hundsun said in a filing on Thursday.

That will give Ma's investment management firm Zhejiang Finance Credit Network Technology a controlling share of Hundsun, the filing said.

The deal has not been finalized yet and still needs the approval from the Ministry of Commerce.

Analysts said that Ma's acquisition aims to improve Alibaba Group's Internet financial services technologically, even though Hundsun tried to emphasize in the filing that the deal has nothing to do with the e-commerce giant, founded by Ma.

"Hundsun does a good job of providing IT services for traditional financial institutions. And the acquisition could help Alibaba obtain certain experience over how to run financing offline directly from Hundsun and further its presence in China's financial services sector," said Li Chao, an Internet financing analyst with Beijing-based market research firm iResearch.

Hangzhou-based Hundsun, founded in 1995, provides software solutions to financial clients including banks, insurance firms, brokerages and fund management companies.

According to the company's annual report, it held a leading position in providing IT services for financial businesses including fund management and banking. The report for last year is not available on the Shanghai bourse.

Upon the completion of the deal, the company and its shareholders will stay independent in terms of human resources, operations, finances and structure, said Hundsun. Its trading will be resumed on Tuesday.

According to the filing, it has no plan of changing current main business in the next 12 months either and the deal will not impact the financial results this year.

But Li said that some of its financial clients may consider turning to Hundsun's rivals, as Alibaba's current financial services compete with those offered by traditional financial institutions.

Chinese Internet companies including Alibaba, Baidu and Tencent Holdings, are all stepping up efforts in providing financial services, which has become a big threat to banks, according to Li.

Alibaba set up a financial service platform, named "Zhaocaibao," in Shanghai Thursday, enabling financial institutions and customers to complete transactions online, news portal 163.com reported.

But the firm told the Global Times Thursday evening that it did not hold any press conferences about "Zhaocaibao."

The deal also raises concerns that Alibaba's Internet finance company may get access to Hundsun's financial database and gain an unfair advantage, according to media reports.