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Amid all the hype over Alibaba's planned IPO, one detail has been overlooked. The blockbuster deal, which could be the biggest Internet IPO ever, apparently won't include the Internet giant's fastest-growing business, the money market fund Yu'e Bao.
Launched less than a year ago to capitalize on the cash balances that merchants leave in Alipay, the e-commerce company's online payment system, Yu'e Bao has grown at a phenomenal rate. At the end of March, just nine months after it opened, the fund boasted 541 billion yuan, or $87 billion, in assets.
It has been labeled a “blood-sucking vampire” by a prominent commentator on state-run television. Executives at China’s largest banks have called for regulators to curb its rapid expansion. The focus of this ire is Internet financing, specifically Yu’E Bao, the fund pioneered nine months ago by Alibaba Group Holding Ltd.’s online-payment affiliate Alipay. Its ease of use, involving a few taps on a smartphone, has drawn deposits from 81 million customers, more than the population of Germany, as they chase returns higher than China’s banks can offer. The total exceeded 500 billion yuan ($80 billion) as of Feb. 28, according to the official Xinhua news agency, double the amount reported by Alipay in mid-January.
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