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Wall Street Journal - Alibaba Affiliate Ant Financial Raises $4.5 Billion in Largest Private Tech Funding Round

China’s Ant Financial raises fresh funds at a roughly $60 billion valuation

 

Alibaba affiliate Ant Financial raised $4.5 billion at a roughly $60 billion valuation, the largest-ever private fundraising round for a tech company. The WSJ's Kane Wu tells us more about China's most valued Internet firm.

 

By Kane Wu

April 25, 2016 11:44 p.m. ET

 

Ant Financial Services Group, the financial-services affiliate of e-commerce giant Alibaba Group Holding Ltd., closed the world’s largest private fundraising round for an Internet company at $4.5 billion, giving it a roughly $60 billion valuation.

 

Ant Financial, which operates Alipay, China’s biggest online-payments platform by transaction volume, raised its latest funding round from a clutch of investors including a Chinese sovereign-wealth fund and the country’s biggest insurers, according to people familiar with the situation. The fresh funding tops the previous $3.3 billion global fundraising record set in January by China’s top online seller of movie tickets and restaurant bookings Meituan-Dianping.

 

While interest in privately held technology companies has cooled in Silicon Valley, Chinese investors have showed appetite to invest in the country’s national champions in the Internet sector. Firms like Ant Financial and Chinese ride-sharing app Didi Kuaidi Joint Co., valued at more than $25 billion, have had little trouble raising capital at growing valuations. Ant Financial’s latest roughly $60 billion valuation is up from a previous valuation of around $45 billion in its first outside fundraising last year.

 

Ant Financial at a glance

 

• Total annual active users as of 2015: More than 450 million (140 million in rural China)
• Alipay users: More than 400 million (as of end of June 2015)
• Yu’e Bao users: 260 million
• Loans from MYbank & Ant Micro Loan extended to: 20 million small & micro businesses and entrepreneurs
• Zhao Cai Bao investors: More than 10 million

 

Source: Ant Financial news release and website

 

Since being split off from Alibaba, the financial-services operation has expanded from an online-payment platform to online wealth-management and banking. It is planning an initial public offering of its own to create an even bigger behemoth. “We hope to list in both domestic and offshore stock exchanges,” said Cyril Han, Ant Financial’s vice president, although he didn’t give a timetable for the listing.

The company is also planning a number of acquisitions in domestic IT infrastructure and rural-financial services, as well as overseas, Mr. Han said.

 

‘We hope to list in both domestic and offshore stock exchanges.’
—Cyril Han, Ant Financial’s Vice President

 

Ant Financial has courted powerful Chinese state-owned firms in its outside fundraisings. In this round, it brought in new investors including the $740 billion sovereign-wealth fund China Investment Corp.’s CIC Capital and a subsidiary of state-owned China Construction Bank Corp.

 

Some of Ant Financial’s existing shareholders, including some of China’s biggest insurance companies, China Post Group, private-equity firm Primavera Capital Group and China Development Bank Capital, put more money into Ant Financial as part of this round.

 

The funding round includes a mix of fresh capital raised by Ant Financial and the sale of existing shares by company insiders, according to people familiar with the situation.

 

Ant Financial, which boasts more than 450 million annual active users, operates a number of products closely linked with Alibaba’s e-commerce and online-marketplace businesses, including the Alipay payments, online money-market fund Yu’e Bao, and banking operation MYbank.

 

Ant Financial was split from Alibaba Group before its record $25 billion initial public offering in New York in September 2014.

 

Ant Financial operates Alipay, China’s biggest online-payments platform by transaction volume. A sales assistant sits by Alipay logos at a train station in Shanghai. Photo: Aly Son/REUTERS

 

The fresh funds will also add ammunition to Ant Financial’s investments into other businesses, many of which were made together with Alibaba Group. The two most recently invested a combined $1.25 billion in Chinese food-delivery app Ele.me, In early March, they also struck a deal to buy a controlling stake in Hong Kong-listed lottery company AGTech Holdings Ltd. for 2.39 billion Hong Kong dollars (US$308.1 million).

 

Ant Financial has invested in Postal Savings Bank of China before its planned IPO in Hong Kong this year, cementing an alliance with the deposit-taking and lending arm of China’s postal service. Alibaba’s asset-light business model depends heavily on outside logistics services to deliver products to customers across China.

 

Although spun off from Alibaba Group, Ant Financial’s growth and ambitions are still largely supported by Alibaba’s prevalent e-commerce platforms—Taobao and Tmall. Alibaba recorded $14.3 billion in sales last year on its “Singles Day” promotions alone last year and all the payments were made via Ant Financial’s Alipay.