Alibaba’s Ant fundraising to take fintech investments to new high

PUBLISHED : Wednesday, 27 April, 2016, 10:57pm
UPDATED : Wednesday, 27 April, 2016, 10:57pm

Financial technology (fintech) investments in the Asia-Pacific region could hit a new high this year, following Alibaba Group affiliate Ant Financial Services’ record US$4.5 billion Series B, or second round, of private equity financing this week.

That deal, which is the world’s single largest private placement by an internet company, has already enabled Alibaba executive chairman Jack Ma Yun to jump ahead of Dalian Wanda Group chairman Wang Jianlin to become the region’s richest man.

Albert Chan, who leads global consultancy firm Accenture’s financial services business in China, said on Wednesday that Ant Financial’s oversized financing round represented “double the amount raised by China in all of the first quarter, which is obviously significant”.

Alibaba’s Jack Ma overtakes Wanda’s Wang Jianlin as Asia’s richest man

Ant Financial’s fundraising bonanza was also nearly double the US$2.7 billion total fintech investments made last quarter in the Asia-Pacific region, according to data from Accenture.

Chan pointed out that fintech investments in China would continue to lead the way globally this year as demand for online financial services further expands in the world’s second-largest economy.

Asia-Pacific fintech investments last year more than quadrupled to reach a record US$4.3 billion, largely driven by initiatives in China.

“This should come as no surprise,” Chan said. “Increasingly, bankers and investors globally have been calling and asking, ‘Let’s learn more about the fintech industry in China?’ The world has pivoted towards us to see what we’re doing in mobile payments and other digital services.”

Alibaba affiliate Ant Financial Services closes record US$4.5b round of financing

Traditional banks are also seeking to engage with fintech start-ups on the mainland to help streamline their operations, drive new business growth and comply with changing regulations.

Ant Financial, which was established in October 2014, has become the country’s unofficial poster boy for digital services in light of its rapid expansion on the back of core business Alipay, the online payment platform that supports the e-commerce empire of South China Morning Post owner Alibaba.

Other businesses now run by Ant Financial include online bank MYBank, credit scoring service Sesame Credit, lending marketplace Zhao Cai Bao, mass-market investment vehicle Ant Fortune and Yu’e Bao, China’s largest money market fund.

The near-ubiquitous reach of Ant Financial in China’s nascent digital finance market ultimately led to its record-setting funding round, according to Paul Haswell, a partner at technology-focused law firm Pinsent Masons.

Fintech a boon for the unbanked but a nightmare for regulators

It also added US$4.3 billion to the deep pockets of Alibaba founder Ma, who is now worth US$33.3 billion, according to a report citing the Bloomberg Billionaires Index.

That has put Ma ahead of the personal fortunes of Asia’s wealthiest, including Wang’s US$32.7 billion and Hong Kong mogul Li Ka-shing’s US$29.5 billion.

The report said Ma owned 37.9 per cent of Ant Financial, which is widely speculated to be planning an initial public offering that is expected to be China’s largest since 2010.

“Internet finance has become one of the Chinese government’s focus areas to help boost the economy,” Forrester Research analyst Charlie Dai said. “The government announced guidelines to facilitate development of internet finance in July last year, which led to the establishment this year of the China Internet Finance Association with 437 members from various sectors.”