Nov 9, 2010 11:42 GMT  ·  By

The Chinese Alibaba Group is said to be raising private equity funds to buy back Yahoo's stake in the company. The company hasn't been very pleased with Yahoo and is now looking at ways it can end its connection to the US company.

Yahoo is still one of the biggest web companies on the planet and is still worth a significant amount of money. But the company has been stagnating for quite a few years and many are saying that it's biggest assets are actually stakes in a couple of Asian internet giants, Alibaba and Yahoo Japan.

Yahoo's relationship with Alibaba in particular has been very poor and it's getting worse. The Chinese e-commerce giant doesn't like the fact that Yahoo owns quite a chunk of the company, a 40 percent stake, without contributing much.

Alibaba Group is one of the biggest players in the Chinese internet market. Alibaba.com, the business-to-business e-commerce site is publicly traded and has a market cap of about $10 billion.

Alibaba Group however, is a private company and also owns the rather successful Taobao e-commerce site and the Alipay payments system, the biggest in China.

Both of these properties are said to be headed for an IPO and Yahoo clearly wants to hang on to its shares at least until then.

Yahoo bought its share in the Chinese company for $1 billion along with Yahoo China, worth about $700 million. That stake is now worth at least $4 billion.

Alibaba is looking to raise funds to buy back the Yahoo-owned share, according to Reuters citing undisclosed sources. It is said to be in talks with private equity companies to create a dedicated fund for this purpose.

This is not the first time the company has tried to buy out Yahoo, but talks so far have not been fruitful.