Giant Interactive Group Inc said it will invest $50 million in China's e-commerce company Alibaba Group through an investment in Yunfeng e-Commerce Funds.

Yunfeng e-Commerce Funds was established by Yunfeng Capital, a China-based private equity firm co-founded by Alibaba CEO Jack Ma.

The share purchase is expected to close before the end of the year, Giant Interactive said in a statement.

Separately, tech blog AllThingsD reported that private equity firm Silver Lake and Russian technology investment firm DST Global, along with Yunfeng, are leading a $1.6 billion tender offer for privately held employee and shareholder stock of Alibaba Group.

Singapore-based investment firm Temasek is also participating in a smaller way, the blog said.

DST and Silver Lake are ceding voting control of their stakes to Alibaba management to sidestep foreign ownership issues in China, AllThingsD said quoting unnamed sources.

If the tender is fully subscribed that would mean a stake of just under 5 percent for the group, and it gives Alibaba a $32 billion enterprise valuation, the blog said.

Yahoo Inc, which holds a 39 percent stake in Alibaba.com, is not selling shares in the tender offer, the blog reported.

This transaction would value Yahoo's stake at about $12.5 billion.

(Reporting by Rachana Khanzode in Bangalore; Editing by Supriya Kurane)

China