Ant Financial, the Alibaba affiliate that operates Alipay, raises $4.5B at a $60B valuation

Ant Financial, the Alibaba affiliate that runs Alipay and other financial services in China, has announced a truly huge round of funding today. The company said it has completed its Series B, which weighs in at a staggering $4.5 billion.

The Wall Street Journal previously reported that the company was raising new funding at a valuation of up to $60 billion, and we understand this is the valuation for the deal. Last year’s undisclosed Series A valued the firm at $45-50 billion.

This round is the largest investment in a tech company to date, surpassing the $3 billion that Didi Kuaidi, China’s homegrown rival to Uber, brought in from investors last summer by some margin. No ordinary round of financing, for sure, but then again Ant Financial is hardly a normal company by any stretch of the definition.

Ant Financial was created in December 2014 when it was spun out of Alibaba before the e-commerce giant went public in the U.S. with a record IPO in September 2014. The company has very much piggy-backed on Alibaba’s vast e-commerce empire — which pulled in $5.3 billion in revenue during the last quarter of business — since then.

It offers a range of financial services, most prominent of which is Alipay — China’s most popular online payment service, used to process payments on Alibaba’s sites — but its portfolio also includes a micro-loans program and Alibaba’s digital bank, MyBank.

All told, it claims to reach 450 million users, most of whom likely interact with Alipay, but Ant Financial puts focus on enabling people in remote areas who have limited access to traditional financial services. It says its “payment, insurance and wealth management services” reach 140 million people in rural China, while MyBank has dished out 20 million loans to SMEs and entrepreneurs.

Beyond China, Ant Financial has moved into India via its investment in Paytm, an e-commerce and payments player that Alibaba has also invested in. Ant Financial said that at the turn of 2016, Paytm had 122 million users and was processing 52 million transactions a month, a number that has grown 230 percent year-on-year.

Ant Financial is tipped to go public in the not-too-distant future. A company representative declined our questions on when and where an IPO might take place, but vice president Cyril Han told the Wall Street Journal that he hopes to list “in both domestic and offshore stock exchanges” in the future.

This could be the last chance for investors to get in on the action privately, so it’s notable that Ant Financial summoned some big names with plenty of strategic value for this record round. Sovereign wealth fund China Investment Corp (CIC) and CCB Trust, a subsidiary of China Construction Bank, joined as new investors, while insurance firms, including China Life, China Post Group, China Development Bank Capital and Primavera Capital Group returned as existing backers.

Ant Financial said that it will work with CIC to expand its footprint overseas “to provide equal access to financial services globally.” You can bet that this growth will be in tandem with Alibaba, which is increasing looking at new growth opportunities outside of China.

http://techcrunch.com/2016/04/25/ant-financial-the-alibaba-affiliate-that-operates-alipay-raises-4-5b-at-a-60b-valuation/

MBA Capital Limited Post Alipay Owner to Start Shanghai IPO Process as Soon as 2016

Alibaba Group Holding Ltd.’s finance affiliate is planning an initial public offering on Shanghai’s main board in what could be China’s highest IPO valuation since 2010, according to two people familiar with the matter.

Zhejiang Ant Small & Micro Financial Services Group Co. has been profitable for three years, enabling it to meet the listing requirements, and may begin the process as soon as this year, the people said, requesting not to be named because the matter is private. The owner of Alipay, China’s most popular payments system, prefers a dual listing with Hong Kong if it gets regulatory approval, the people said.

Ant Financial, which is controlled by Alibaba founder Jack Ma, dominates payments on China’s biggest e-commerce platforms through Alipay and also manages Yu’E Bao, the nation’s largest money-market fund. The company is currently targeting a private round of fundraising for at least $3.5 billion at a valuation of about $60 billion, people familiar with the matter said in April.

Alipay, one of the more recognizable names in online finance and consumer payments, would be the largest Web player by far on mainland bourses.

“China doesn’t have an Internet company of this scale and influence, so it could enjoy a significant premium in value if it lists in the country,” said Li Muzhi, a Hong Kong-based analyst at Arete Research Services LLP. “A lot of the potential retail investors are also Ant Financial’s users.”

Ant Financial declined to comment in an e-mailed statement.

China’s stock listing rules require companies to be profitable for at least three years and accumulate a profit of more than 30 million yuan ($4.6 million). The entities also need to generate accumulated cash flow of at least 50 million yuan, or post a total of 300 million yuan for revenue in the latest three years, according to the regulations.

Ant Financial meets those measures, said the people, who have direct knowledge of its earnings. The people didn’t say how much the company would seek to raise or what valuation it would have at listing.

An IPO at a $60 billion valuation would be the biggest on the mainland since Agricultural Bank of China Ltd. listed in Shanghai in 2010.

Ma, China’s second-richest man according to the Bloomberg Billionaires Index, said last year he was open to a Hong Kong listing if regulators welcomed it. Alibaba’s own plans to list in Hong Kong in 2014 were derailed because the city wouldn’t waive a ban on multiple share-class structures and the e-commerce operator instead held a record IPO in New York.

Alibaba is entitled to a stake of about one-third of Ant Financial with regulatory approval, according to a 2014 filing to the U.S. Securities and Exchange Commission. Alibaba has perpetual rights to 37.5 percent of the finance arm’s pretax earnings until it acquires the stake, the filing said.

Ant Financial paid Alibaba 502 million yuan in the December quarter, compared with 411 million yuan a year earlier, according to an Alibaba filing. That implies Ant Financial had pretax profit of at least 1.3 billion yuan for the period. The company posted net income of 333 million yuan in 2011, according to filings from the local branch of the State Administration for Industry & Commerce.

“As for Alibaba, unless it gets approval to buy the one-third stake in Ant, investors have already factored in the profit-sharing benefits it’s receiving,” Arete’s Li said.

An alternative option would be for Alibaba to receive a one-time payment equivalent to 37.5 percent of the value of Ant Financial determined prior to its IPO, which would amount to at least $22.5 billion based on its current valuation.

The agreement was brokered after a dispute between Alibaba and Yahoo! Inc. in 2011. At the time, Alibaba transferred Alipay into an entity that was controlled by Ma, citing concerns that it wouldn’t be permitted to conduct business in China while it had foreign ownership.

Ant Financial has evolved from an outsider in an industry that needed “stirring up,” as Ma described two years ago, to an online giant now working with the largest state-owned players. The country’s sovereign wealth fund China Investment Corp. and an investment vehicle of China Construction Bank Corp. are leading its latest round of fundraising, people have said. Ant Financial also counts the national social security fund as a backer.

Ant Financial’s micro lending business handled about 30 billion yuan of loans in January. More than 200 million users buy financial products through Ant Financial via services including Yu’E Bao and Zhao Cai Bao, a platform that lets small businesses and individuals borrow from investors, the company said in August.

JD.com Inc., Alibaba’s largest competitor, said its finance unit raised 6.65 billion yuan in January, according to an announcement.

http://www.bloomberg.com/news/articles/2016-04-18/alipay-owner-said-to-start-shanghai-ipo-process-as-soon-as-2016

MBA Capital Limited Share Post Alipay to Expand into European Markets

Alibaba has announced plans to launch its Alipay mobile payment service in Europe this summer. CRI's Victor Ning has the details.  Alibaba has announced the planned European launch of Alipay at the just-concluded financial services event Money 20/20 in Copenhagen. Beginning this summer, users will be able to make payments through the Alipay app in France, Germany, Italy and the UK. Lu Jun with Alibaba says in addition to serving as a payment option, Alipay can also help Chinese tourists plan their trips while abroad. "Before when people traveled aboard, they usually had a hard time finding local points of interest. Now when they open Alipay, they can easily find recommendations on restaurants, sights and other places to visit. While shopping, they can also use Alipay to make payments, or even receive discounts. The vendors can also use Alipay to promote themselves and reach more Chinese customers." Alibaba hasn't said which local businesses in Europe will accept Alipay, as negotiations are still underway. The move marks Alipay's biggest expansion out of Asia so far. Alibaba started moving Alipay into the global market in 2014. It's now available for use at some 60-thousand businesses outside the Chinese mainland. Lu Jun says Alipay has already built an impressive network in Asia. "In South Korea alone, around 30,000 shops and businesses accept Alipay. In Seoul's famous Myeongdong commercial district, most vendors now accept the app. In Japan, our partners include a number of large shopping malls, electronics and appliance stores, as well as convenience stores like 7-Elevens. We also work with some duty-free shops in Thailand, and the Universal Studios theme parks in Singapore. " Alibaba expects a total of one-million vendors outside the mainland to begin accepting Alipay within the next three years. The company is ramping up its services outside the mainland to try to keep up with the growing number of Chinese people travelling abroad. Last year, around 120 million Chinese traveled to foreign destinations. The World Travel & Tourism Council estimates Chinese tourists spent around 215 billion US dollars abroad, doubling their spending from the year before. Alipay is launching in Europe in partnership with Wirecard, an IT provider for payment processing. Wirecard Executive Vice President Susanne Steidl says mobile payments have a bright future. "Everything is focusing on a mobile phone. All additional gadgets will be reduced. No more cameras, and in the future, also no more credit cards, no more cash. All will be focused within the mobile phone, which is more convenient for the customer; it's safer for the customers. And it gives more transparency to the customer because he sees all the transactions and his available money, all on his phone, without having to logon to 20 different websites. " Alibaba says its payment app currently processes 170 million transactions per day worldwide. For CRI, I'm Victor Ning. http://english.cri.cn/12394/2016/04/08/4202s923488.htm