Alibaba’s financial services affiliate Ant Financial is raising a new round of funding at a valuation of nearly $60 billion. Ant Financial is the operator of Alipay, China’s largest online payments service with more than 500 million active users. The Alipay operator, which was not included in Alibaba’s record $25 billion IPO in 2014, is raising $3.1 billion from a group of new and existing investors, sources familiar with the matter told TechCrunch.
Ant Financial IPO set for next year
Analysts expect the company to go public in China next year. Last summer, the company raised $1.9 billion in Series A funding at a valuation of $45 billion to $50 billion. Besides Alipay, it operates other businesses including online bank MYBank, Sesame credit scoring, and a micro-loan program. It was spun off from Alibaba in 2011 despite stiff resistance from key investors Yahoo and SoftBank.
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Sources told TechCrunch that the funding round is expected to be completed by mid-April. The fresh funds will give Ant Financial more financial clout as it invests in a variety of businesses. A few days ago, it teamed up with Alibaba to buy controlling stake in Hong Kong-listed lottery company AGTech Holdings. In December, Ant Financial invested in Postal Savings Bank of China.
Still tightly controlled by Alibaba
Alibaba and its financial affiliate are separate entities. But the latter is tightly controlled by Alibaba executives and investors. The Hangzhou-based e-commerce giant would also profit from Ant Financial’s IPO as it holds equity in the company. The two often join hands to invest in different companies. Last year, Alibaba and Ant Financial jointly invested in India’s Paytm, a rapidly growing mobile payments firm.
The online payment services enjoy a technological edge over China’s inefficient state-run banks. Also, the state-run banks favor lending to large companies, which gives companies like Ant Financial an opportunity to corner the small borrower market. The company uses vast troves of data to alleviate the risk of lending to small borrowers.