SHANGHAI: Alibaba Group Holding Ltd, China’s biggest e-commerce company, said on Thursday its third-quarter revenue jumped 56 per cent, beating expectations as it shrugged off concerns about a wider market slowdown.

The firm, which also raised its guidance for the year ahead, will take a 33 per cent stake in payment affiliate Ant Financial, an important step ahead of an expected initial public offering (IPO) by Ant, valued at $60 billion in 2016.

“This is no secret, everybody knows that Ant Financial will IPO, and (buying the stake) is just something they had to do before that happens,” Beijing-based analyst Li Chengdong said.

The strong growth and the move to bind itself more closely with Ant comes as Alibaba looks to fend off a growing challenge from rivals in its core online retail business that analysts expect will start to put downward pressure on growth.

Alibaba has, however, been defying expectations.

Revenue for the October-December period rose to 83.03 billion yuan ($13.19 billion), up from 53.2 billion yuan a year earlier. That exceeded the 79.8 billion yuan average estimate of 28 analysts polled by Thomson Reuters.

The firm also raised 2018 revenue guidance to growth of 55-56 per cent, up from previous guidance of 49-53 per cent.

The deal with Ant, which will replace the current system where Alibaba receives 37.5 per cent of Ant’s pre-tax profit, will see the firm acquire newly-issued equity in the affliate in exchange for certain intellectual property rights it owns.

The deal will have no cash impact on Alibaba, it added.

“Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector,” Alibaba Chief Executive Officer Daniel Zhang said in a statement.

Ant operates hugely popular online payment system Alipay.

Alibaba is looking for new areas such as cloud computing, payments and offline retail to maintain rapid growth rates that helped propel its shares to roughly double in value last year, making it one of the world’s most valuable companies with a market capitalisation of $523 billion.

Reuters