Ant Financial — parent firm of Alipay — is reportedly gearing up for a $5 billion equity funding round that could inflate its valuation all the way to $100 billion. Said fundraising would also bring the financial services company, which is still 1/3 owned by the Alibaba Group, one step closer to its long-anticipated IPO by offering a most current valuation. Ant Financial was last valued at around $60 billion.
Ant has no solid or announced IPO plan — and, as of yet, has no comment on the rumored upcoming fundraising round. The fundraising reportedly underway, however, is being widely taken as pre-IPO fundraising. Fundraising pre-IPO has become common around hot Chinese firms.
The round also comes as the market in China for such funding is looking extremely active. Chinese eCommerce firm JD.com, for example, is raising funds for its logistics unit with a target of around $2 billion.
“The overall China (eCommerce) market is growing, and Ant’s market share is very high,” said Hao Hong, head of research at brokerage BOCOM International.
“So, even at a time like this, if Ant were to target $5 billion, that will not be a problem,” he said, referring to the global stock market turmoil that has also hit Chinese equities, on track on Friday for their worst day in two years.
Alibaba has also officially modified its relationship with Ant, taking a 33 percent stake as opposed to receiving 37.5 percent of Ant’s pre-tax profit. This step is also viewed as critical to the IPO. Alibaba created Alipay in 2004 to emulate PayPal’s relationship to eBay. Alipay was eventually spun off into ints own firm — Ant Financial — in 2014, though Alibaba founder Jack Ma still controls Ant.
Ant is seen as uniquely valuable, given its highly prominent position in Chinese eCommerce and, increasingly, in real-world physical commerce as well.
Current shareholders in Ant include large state-owned institutions such as China Life Insurance and China Post Group, parent of Postal Savings Bank of China.
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