• Alibaba executive chairman Joseph Tsai is credited for bringing in major investors to the company.

Alibaba executive chairman Joseph Tsai is credited for bringing in major investors to the company. (Photo : Reuters)

A top executive of Chinese e-commerce giant Alibaba Group is forming a multi-billion-dollar family office to invest the earnings taken from the company’s huge $25 billion New York IPO, the Wall Street Journal reported on Thursday quoting insider sources.

Joseph Tsai, Alibaba's executive chairman, and other senior Alibaba officials are establishing an office in Hong Kong with an opening date this summer, the report said, adding that Tsai, who controls a roughly $6.5-billion stake in Alibaba, and other company executives are looking to diversify their wealth following the public trading and lockup expirations of Alibaba's shares.

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The family office will be co-managed by Oliver Weisberg, Hong Kong managing director of hedge fund manager Citadel LLC, and Alexander West, a founding partner of Blue Pool Capital Ltd., a Hong Kong-based hedge fund backed by Tsai, the source said.

Weisberg will leave Citadel at the end of June after nearly 10 years, said Citadel spokesperson Katie Spring. "We wish him the best," she said.

Weisberg had been a key architect in Citadel LLC's strategic approach across Asia, particularly in China, and had previous experience as an investor in private equity deals and distressed debt at Deutsche Bank AG and Goldman Sachs Group, the Wall Street Journal said in its report.

The family office is being modeled on the investment programs of esteemed U.S. endowments like Yale University, from which Tsai studied, with long-term investing focus, the person said.

The new office is also seen as the start of a global investment scene by a new generation of wealthy Chinese business executives who have profited in the country's Internet boom.

While Asia's previous generation of billionaires typically made their fortunes in real estate and mining and invested in established global equity funds, modern entrepreneurs like Alibaba's founder Jack Ma, one of the richest people in Asia, and smartphone maker Xiaomi's Lei Jun, are bringing in new ideas on how to use their wealth, often backing technology ventures of friends and supporting young investment managers, the Wall Street Journal said.

Tsai has had prior experience investing in family offices before joining Alibaba in 1999. In the 1990s, he worked for Investor AB, a powerful Swedish investment vehicle controlled by the Wallenberg family that held stakes in major international companies such as the drug maker AztraZeneca and telecommunications giant Ericsson. It was also in Investor AB that Tsai met Jack Ma at Alibaba.

The Taiwan-born Tsai has been Alibaba's point person with Western investors, giving the then-unknown Chinese e-commerce company credibility among bankers and businesses.

He also played a key role in the New York IPO, Alibaba's repurchase of half of Yahoo, Inc.'s stake in the company for $7.1 billion, and bringing in investors as diverse as the private-equity firm Silver Lake and the sovereign-wealth fund China Investment Corp.