What’s In There For Yahoo! Inc. (YHOO) As Alibaba Sells Loan Unit?

They say that Yahoo! Inc. (NASDAQ:YHOO) is such a difficult company for any analyst to give an accurate valuation, but the company has a market valuation of about $36 billion. However, the value of its 24% stake in Alibaba is something that investors have been following closely given the looming Alibaba IPO. Bloomberg’s Leslie Picker and Bomoda’s CEO, Brian Buchwald, discussed the latest developments in Alibaba and the IPO issue.

Alibaba, a Chinese giant Internet marketplace in which Yahoo! Inc. (NASDAQ:YHOO) owns a significant stake, announced the selling of its loan unit, the moved separates Alibaba from its financial units, having already spun off its payment service, Alipay.

Leslie commented on the Alipay’s spinoff back in 2011 and said the main objective, then, was that the Chinese government restricts foreign ownership of payment services in the country.

“[…] Once they spun it off, it was a bit controversial, because of the way they left some major shareholders, such as Yahoo!, out of the conversations,” she observed.

In the plans to sell Alibaba’s lending business, Leslie sees cash windfall opportunity for Alibaba that may also trickle down to Yahoo! Inc. (NASDAQ:YHOO) and other investors in the online marketplace operator. Such windfall would be realized if the loan unit were to do its own IPO.

Currently, Alibaba’s gains in the business are capped at $6 billion, but an IPO of the business would remove the cap. As the company’s IPO preparation enters the last leg, with roadshows lined up starting next week, the company’s leadership also came into focus.

“I think the biggest challenge that Alibaba faces right now regarding their IPO is the governance issue. Jack Ma is definitely an amazing, charismatic executive and leader. But he is also relatively mercurial, and he controls his company […],” said Buchwald.

He said there are so much behind the scenes such as various intrigues in Chinese business leadership, which their Western counterparts like those at Yahoo! Inc. (NASDAQ:YHOO), for instance, are not used to here.

Disclosure: none