Alibaba, Baidu and Tencent Holdings have all been engaged in e-commerce and communications before entering the finance and insurance industry. (Photo : Reuters)
China's Alibaba Group Holding Ltd., the world's biggest e-commerce company, released a statement that it plans to buy shares in New China Life Insurance Co. Ltd., according to the Shanghai Securities News.
The news agency noted that Central Huijin Investment Ltd., who owns 31.34 percent shares of the insurer, said that it plans to sell some of its stakes to Alibaba, but the company did not give any details on the amount of the deal.
New China Life Insurance suspended its trading negotiations on Jan. 19 because they are still in the middle of negotiations that would have an impact in shareholding structure.
Alibaba's spokesman did not disclose any details on the trading issues and called it "market speculation," while a spokesman from New China Life Insurance stressed that "currently, there is nothing we can tell you."
Alibaba has already invested in China's insurance market. The founders of Alibaba and Tencent Holdings Ltd. (0700.HK) were among a consortium of investors who purchased stakes in Ping An Insurance Group Co. of China Ltd. (2318.HK) (601318.SS) in a HK$36.5 billion ($4.7 billion) deal in December, Reuters reported.
New China Life Insurance provides life insurance services and products and has market capitalization of $24 billion.
Alibaba's strategic investments in insurance companies have sparked speculations that the company was planning to disrupt China's financial sector. The deal with Ping An suggests that Alibaba and Tencent have been eyeing the financial sector as a business ripe for technological disruption.
Furthermore, these two Internet giants, along with Baidu Inc. (ADR) (NASDAQ:BIDU), are spending billions of dollars to back similar ventures in an attempt to create a one-stop shop for consumers, according to a report from Valuewalk.com.
Alibaba is an e-commerce company, Tencent Holdings is on social media networking, and Baidu is a search engine leader.
With the rise of smartphone use and users in China, the three companies consequently invested in similar businesses to gain more customers.
