Online financial services firm valued as high as $60 billion
Ant Financial Services Group (Ant Financial), the online financial services arm of Chinese e-commerce giant Alibaba Group Holding, announced on Tuesday that it has completed a $4.5 billion series B round of financing, which experts said will help Ant Financial get closer to an IPO.
The financing, the world's largest-ever single private placement by an Internet company, puts the value of Ant Financial, a non-listed company, at around $60 billion, domestic financial news website yicai.com reported on Tuesday. Such a high valuation brings Ant Financial close to NASDAQ-listed Baidu Inc, China's search engine giant, whose market capitalization was around $65 billion as of Tuesday.
"The high valuation is understandable considering the huge potential of China's Internet finance market and the large customer base of Ant Financial," said Liu Xingliang, head of the Data Center of China Internet, a Beijing-based Internet research organization.
"The valuation of Ant Financial may even exceed $100 billion," Liu told the Global Times on Tuesday.
Guo Dazhi, research director for the Zhongguancun Internet Finance Institute, agreed with Liu, "The valuation of Internet finance companies is mainly based on the growth potential of the companies, which is quite different from the valuation of traditional companies."
China Investment Capital Corp and CCB Trust, a subsidiary of China Construction Bank, each leading a consortium, participated in the funding round as new strategic investors, according to a statement Ant Financial sent to the Global Times on Tuesday.
Existing Ant Financial shareholders, including China Life, China Post Group and private-equity firm Primavera Capital Group also joined in the financing.
"The endorsement by large-scale State-owned companies can help Ant Financial gain more government support, resources and credibility," Luo Mingxiong, president of Beijing Jingbei Crowdfunding Technology Co and director of the Institute of Internet Finance of Shanghai Jiao Tong University, told the Global Times on Tuesday.
Ant Financial's current valuation of $60 billion follows its previous series A round of financing in July last year, when the company was valued at around $45 billion, Beijing-based financial magazine Caixin Weekly reported in July 2015.
"The rapid growth in Ant Financial's valuation shows that investors are betting heavily on China's Internet finance sector," Guo said.
The total value of China's Internet finance sector will reach 17.8 trillion yuan ($2.74 trillion) by the end of 2016, and 43 trillion yuan by 2020, sohu.com reported on March 19.
Prospects of IPO
"The capital raised in the Series B will underpin our long-term growth in rural and international markets," Eric Jing, president of Ant Financial, said in the company's statement.
Before this round of financing, there has been speculation that Ant Financial will start its IPO procedure as soon as this year, making it the largest IPO in China's A-share market since 2010.
"Ant Financial is paving way for its IPO through this huge series B financing," said Guo. "The current high valuation has also provided an available basis for its IPO pricing."
Luo also noted that the cooperation with large State-owned companies can help make it easier and quicker for Ant Financial to get listed on China's A-share markets.
Both Guo and Luo estimated that Ant Financial's IPO will get launched before 2018.
Ant Financial has made a profit for three consecutive years, one of the IPO requirements for the main board of the A-share market, Shenzhen-based financial news website stcn.com reported on April 18.
Founded in October 2014, Ant Financial now operates a number of businesses including Alipay, MYbank, and Yu'ebao, one of China's largest monetary funds. Ant Financial's annual active user base has surpassed 450 million, according to the company.
As of the end of March 2016, MYbank and Ant Micro Loan had collectively provided loans to over 20 million small and micro businesses and individual entrepreneurs, according to Ant Financial's statement.
Guo noted that the series B financing can help Ant Financial consolidate its leading position in the domestic Internet finance field, where other Internet giants such as Suning Commerce Group and JD.com Inc are also striving for market share.
The government has put stricter restrictions on Internet finance, for example, the State Council, the country's cabinet, ordered on Sunday to crack down online peer-to-peer lending sector, which has been growing rapidly in recent years.
As for the government's latest move, Luo said that a more standardized market environment will be beneficial for the growth of enterprises.
