Alibaba Group Holding Ltd Affiliate Ant Financial Eyeing 2017 IPO

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Alibaba’s financial services arm Ant Financial is planning to go public in mainland China by 2017. Citing documents from CDH Investments, state-run Shanghai Securities News reported that Ant Financial was valued between $35 billion and $40 billion. Ant Financial, which owns Alipay, is looking to raise $4 billion in a private placement with investors for 10% of its stake before going public in 2017.

Alipay parent will ‘definitely go public’

It is unclear how much Ant Financial would raise in the IPO. Alibaba raised a record $25 billion when it went public in September last year. The Hangzhou-based e-commerce giant spun off the financial affiliate in 2011. Alibaba doesn’t directly own Ant Financial, but its executives effectively control the financial services firm. Alipay processes most of Alibaba’s e-commerce transactions.

In November last year, Alibaba founder Jack Ma said that Ant Financial will “definitely go public.” Soon after Ma’s statement, Alibaba executive vice-chairman Joe Tsai said that the company was looking to list the financial services firm on mainland China exchanges. An Ant Financial spokeswoman told Prudence Ho of The Wall Street Journal that it had not set any timetable for the potential IPO.

Alibaba entitled to 37.5% of Ant Financial’s profits

Alibaba’s $25 billion IPO did not include Ant Financial. In August last year, the two firms revised their profit-sharing agreement, which entitled Alibaba to 37.5% of Ant Financial’s pretax profits. The e-commerce giant can also take a direct stake in the financial services firm in the future. Alipay has more than 300 million registered users in China. It handles over 80 million transactions a day.

Last week, Ant Financial’s sky high valuations made a mom a multi-billionaire. Wang Yulian, the mother of Jack Ma’s private equity fund partner, owns 4.6% stake in Ant Financial. The financial services business earned a net profit of 2.63 billion yuan in FY2014. It expects profits to grow at an annual rate of 63.5% between 2015 and 2017, reports Shanghai Securities News. Its revenue jumped 92% YoY to 10.2 billion yuan in 2014.

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