In what is being considered to be one of the largest funding rounds for an unlisted group, a $14bn funding round was recently closed by Ant Financial. This funding tound has raised the valuation of the payments affiliate of Chinese tech giant Alibaba at over $150bn on a pre-money basis.
Compared to the market cap of the US investment bank Goldman Sachs, this imputed equity valuation of Ant is more.
In the $15.5tn third party mobile payments market in China, this funding round has sealed the position of the company as the largest player and established it as a company that is fast expanding some of its other financial services such as wealth management, lending to consumers and small businesses, and insurance.
There were a number of foreign players in the funding round including Singapore’s GIC and Temasek, Malaysia’s Khazanah, Canada Pension Plan Investment Board, Warburg Pincus and General Atlantic and the round was initially aimed at raising $10bn.
“We are pleased to welcome these investors as partners, who share our vision and mission, to embark on our journey to further promote inclusive finance globally and bring equal opportunities to the world,” said Eric Jing, chairman and chief executive of Ant.
Renminbi from domestic investors was also raised by the company which operated China’s largest mobile payments platform.
There were some fresh investors from mainland China and included some that were part of Ant’s ecosystem in addition to the existing shareholders who wanted to avoid dilution who were the primary targets of the tranche denominated in renminbi and which was worth about $3bn.
The fact that the Chinese authorities are yet far from approving foreign investment in the suite of online financial services offered by Ant was reflected in the development that a wholly owned offshore subsidiary called Ant International was used by Ant to buy by international companies.
These holdings are designed to convert into shares once the company lists.
Currently however, there is opacity in the regulations on foreign ownership of Chinese payments technologies. “It doesn’t mean it’s forbidden but it’s unclear,” a person close to the matter was quote din the media as saying. “But investors have been comfortable with this.”
For Ant, regulation is amongst its biggest challenges for the future even as the company has made rapid growth since being spun out of Alibaba.
Various areas of financial markets are being clamped down upon by Chinese regulators who have been concerned about the growth and the subsequent implosion, of wealth management products put to use by companies such as Anbang Insurance Group which is now being unwounded but was once a very aggressive company.
(Adapted from FT.com)