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Technology

China's Ant Financial plans to raise funds at US$150 billion valuation ahead of initial public offering

Appetite among US investors has been strong this year for tech sector debuts by Dropbox, Spotify and Zscaler, easing concerns raised by the fall in Snap Inc’s shares last year.

PUBLISHED : Wednesday, 11 April, 2018, 7:12am
UPDATED : Wednesday, 11 April, 2018, 7:11am

China’s Ant Financial Services Group is in talks with investors to raise at least US$8 billion in its next planned round of funding, potentially valuing the company at about US$150 billion ahead of an expected stock market flotation, people with knowledge of the plan said.

Singapore state investor Temasek Holdings is likely to be the lead investor in the latest round of equity raising by the company, controlled by Alibaba Group founder Jack Ma Yun, three people said.

Reuters reported in February that Ant, owner of China’s top online payment platform Alipay, was planning to raise up to US$5 billion, which could value the online payments giant at more than $100 billion.

One of the people said Ant could end up raising between $8 billion and $10 billion, as a result of strong investor demand.

All the people spoke to Reuters on the condition that they not be named as the fundraising details are confidential. Ant and Temasek declined to comment. Alibaba did not immediately respond to Reuters request for comment.

A pre-IPO round is an increasingly common move by sought-after Chinese companies to establish valuations and widen their investor base ahead of going public. 

A US$150 billion valuation would make Ant one of the biggest public flotations ever, dwarfing this year’s launch of Spotify and Dropbox and comparing to the US$104 billion float of Facebook six years ago or Alibaba’s own US$168 billion valuation in 2014.

Alibaba said in February it was taking a 33 percent stake in Ant, replacing the previous system where it received 37.5 percent of Ant’s pre-tax profit, in what was viewed as an important step ahead of any IPO.

“Part of the increase in valuation might be because the new investors have received extra features,” said Jay Ritter, an IPO expert and professor at the University of Florida.

“But part of the increase is because the company is continuing to live up to expectations, and is becoming an even more important player in China’s mobile payment space.” 

The Wall Street Journal reported earlier on Tuesday that Ant was now planning to raise $9 billion in its planned round of funding, potentially valuing the company at $150 billion.

The WSJ said the owner of Alipay was expected to list on both domestic and overseas exchanges, in line with previous speculation that it would list in both Hong Kong and New York.

Appetite among US investors has been strong this year for tech sector debuts by Dropbox, Spotify and Zscaler, easing concerns raised by the fall in Snap Inc’s shares last year.

Alibaba set up Alipay in 2004, modelling the business on PayPal, to help Chinese buyers shop online, and in 2011 controversially spun it off and rebranded the payment processor into Ant Financial three years later.

After becoming a dominant payments company in China, Ant Financial focused on international markets by buying a stake in Indian payment firm Paytm and Thai financial technology firm Ascend Money.

Its attempt to buy U.S. money transfer company MoneyGram International was, however, blocked at the start of this year by US officials on national security grounds, a blow to Ma who had promised President Donald Trump that he would create 1 million US jobs.

Current shareholders in Ant include large state-owned institutions such as China Life Insurance, China Post Group – parent of Postal Savings Bank of China – and a unit of China Development Bank.

Alibaba is the parent company of the South China Morning Post.