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Feb.20 (NBD) -- Chinese e-commerce giant Alibaba has increased stake in the country's most prestigious investment bank China International Capital Corporation (CICC), a further move in the financial sector after buying stake in Huatai Securities last year.

Alibaba bought 117 million CICC's H-shares at an average price of 15.5 Hong Kong dollars (2.0 U.S. dollars). Currently, it owns a 4.84 percent stake in the investment bank, making it CICC's third largest shareholder behind Tencent and Central Huijin, a unit of China's sovereign wealth fund China investment Corp.

CICC is the first joint venture investment bank in China and earned a reputation for being the Goldman Sachs of China after leading a string of state-owned enterprises to IPO.

Due to good performance of CICC shares, Alibaba has made an unrealized gain of 165 million Hong Kong dollars (21.0 million U.S. dollars) with a rate of return standing at 9.07 percent in less than one week.

However, making a profit through bid-offer spread on the secondary market is obviously not the most important reason for their investment. It is actually a strategic deployment in the financial sector.

An analyst says Alibaba is eyeing the CICC's strength in its overseas business and fortune management business.

It is noted that CICC has reported revenue of 1.3 billion yuan (192.4 million U.S. dollars) from the regions outside mainland China in the first half of last year, a year on year increase of 21.35 percent. CICC will be a good platform for Alibaba when it conducts overseas mergers and acquisitions.

Despite limited number of outlet stores, the investment bank has quite a number of high-net-worth customers. As of the end of the first half of 2018, the number of wealth management clients has reached 41,700, an increase of 8 percent compared with the end of last year, with each account valued at more than 1.8 million yuan (266,437.7 U.S. dollars).

The analyst says CICC and Huatai Securities are complementary for Alibaba as they can serve different types of customers.

Alibaba says it hopes that the tie-up with CICC will combine their expertise in finance, technologies and data processing.

The collaboration is expected to help the e-commerce giant setting up a bigger financial ecosystem and to fuel listings of retailing startups on Taobao. For example, a couple of popular female fashion clothing store have reaped sales of over 1 billion yuan (148.0 million U.S. dollars) in the first five minus of the Double 11 Global Shopping Festival 2018, making them eligible to float on the stock market.

In February of 2018, a makeup retailer Yu Jia Hui made its IPO debut on the A-share market, marking the first e-commerce IPO.

Conversely, those quality startups on Taobao are potential customers for CICC.

It is noticed that Alibaba's rival Tencent has made an investment in CICC in 2017. So far, two public funds issued by a fully-owned subsidiary of CICC have been launched on Tencent's money management platform Licaitong, reported the new media platform under STCN.

Apart from CICC, Tencent also invested Internet securities company www.Futus.com, which is able to trade stocks listed in the U.S. and China's Hong Kong.

Both Alibaba's money management platform Alipay and Tencent's Licaitong have strong financial features. According to a financial self-media on Baidu's news platform Baijiahao, it is likely that the two platforms can earn commissions in the future as people trade stocks on Alipay and WeChat.

Currently, Alipay and WeChat users are able to check market information on the platform and many are potential customers of funds and other investment products.

Email: tanyuhan@nbd.com.cn