Yahoo Finance reported Thursday that it had raised $500 million in a deal that would create the second largest private equity fund in the United States.
Alibaba’s Alibaba.com will be the second-largest fund in America.
The deal will give Yahoo the opportunity to continue its growth in search engine and digital advertising businesses and will allow Yahoo to further develop its core businesses, the fund’s co-founder, Jeff Gundlach, told investors in a conference call Thursday.
The fund will also include funds that own the majority of Alibaba’s common stock, the company said.
The company plans to add to its investments in the digital advertising industry in the future, Gundlac said.
Yahoo’s stock closed up 3 cents, or 2.6%, at $41.77.
The funding will allow Alibaba to continue growing its search engine as it seeks to reach a broader audience of potential users, according to the Wall Street Journal.
Alibaba is currently the world’s largest search engine, and its search traffic reached $5.4 trillion in the second quarter, up more than 10% from the same period last year, according a Reuters analysis of data from comScore.
Alibaba has struggled with search performance over the past several years, with investors worried about the company’s ability to maintain its position as the top search engine in the world.
The Alibaba.net search engine is a key element of the company.
The search giant is also the parent company of e-commerce site Taobao and a unit of China’s Alibaba Group Holding Corp. Alibaba and its other digital advertising partners are growing rapidly in China, and it has been able to tap into the Chinese market’s growing demand for online shopping.
Alibaba currently has $1.2 trillion of assets under management, according the Wall St. Journal.
Its business has grown from less than 1% of global revenues in 2014 to nearly 11% in 2020, the report said.
Alibaba also recently acquired a majority stake in Google, which also has grown rapidly in the past few years.
Alibaba now owns about 17% of Google, up from 8% in 2014, and more than 6% of Yahoo, according To The Wall Street, which cited an unnamed person familiar with the matter.
Alibaba acquired the other 49% stake in Yahoo in the same transaction in 2014.
The acquisition was a sign that Alibaba’s search and advertising business will continue to expand as it competes for an increasingly important slice of the global internet advertising market.
The transaction was first reported by Bloomberg and Bloomberg News.
Alibaba’s $500m deal to buy Yahoo’s search-related businesses was first announced in June, and was valued at about $700 million.
The $500million deal also includes a $500 billion investment in Yahoo’s parent company, Chinese e-retail giant Alibaba.
The Wall St Journal reported that Gundlache told investors that the fund will have a “very substantial” stake in the Alibaba business, and that it will be able to make further investments in search-oriented businesses in the long term.
Yahoo has been growing rapidly as part of the internet advertising boom, which has been fueled by a number of new search engine offerings.
Alibaba will also become a partner with Google to offer its own online ads, as well as its own search advertising platform, the news site said.