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The financial affiliate of Chinese ecommerce group Alibaba has raised $4.5bn from mostly state-backed investors, in what it said was the largest private placement by an internet company globally.
Investors in the Series B financing round include a unit of China Investment Corp (CIC), the country’s sovereign wealth fund, and a subsidiary of China Construction Bank, the country’s second-largest lender by assets, according to a statement by Ant Financial on Tuesday.
Ant did not disclose the size of the stake but the fundraising values Ant Financial at $60bn, according to China Business News, a respected daily newspaper that is part-owned by Alibaba. The valuation places Ant Financial among the world’s most valuable private technology companies, alongside smartphone maker Xiaomi and US car-hailing app Uber. A previous funding round in June 2015 valued the company at $45bn-$50bn.
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Ant Financial Services Group includes Alipay, China’s leading online and mobile payments service; MYbank, an online-only lender established last June targeting consumers and small businesses; Sesame Credit, an experimental credit rating service that draws on Alibaba’s trove of user data; and Tianhong Asset Management, the fund company that manages Yu’e Bao, the money-market mutual fund linked to Alipay.
In addition to new investors CIC and CCB, the latest fundraising includes additional investment by existing Ant Financial shareholders including the parent company of Postal Savings Bank of China; the private equity arm of China Development Bank; and Primavera Capital Group, the private equity fund run by Fred Hu, former Goldman Sachs chairman for greater China, according to the statement.
Eric Jing, Ant Financial’s president, said: “The capital raised . will allow us to invest in the infrastructure, such as cloud computing and risk control, that will underpin our long-term growth in rural and international markets.”
Ant Financial has previously said it intended to conduct an initial public offering on the mainland but has not offered a timeline.
The company said its active user base surpassed 450m in 2015, including 140m rural users. China’s central bank recently launched a crackdown on fraud and risk in online finance, a campaign that analysts said was likely to benefit established companies with strong compliance and risk management capabilities.
The domestic Alipay business, which is based on collecting transaction fees from merchants and individual users, remains the company’s dominant revenue source, analysts say. China is largely forgoing widespread adoption of debit and credit cards, proceeding directly to digital payments: iResearch forecasts that online payments for 2016 will grow 33 per cent year on year, following 46 per cent annual growth in 2015.
Alipay’s market share in internet payments was 48 percent last year, ahead of the 20 percent share for Caifutong, the payment service run by online gaming and social media group Tencent Holdings, according to iResearch.
Date: April 26, 2016