Investments

Ant Financial Seeks $10B In Funding

Ant Financial is planning on raising $10 billion over the next couple of days, possibly bringing in the Carlyle Group and the Canada Pension Plan Investment Board as investors, which it will primarily use for expansion overseas. The Chinese payments company is reportedly worth around $150 billion in the round, Bloomberg reported.

Warburg Pincus Managing Director Ben Zhou, whose firm is also joining the round, told Bloomberg.“Ant Financial’s mobile payments network is unique and can’t be found anywhere else globally, it’s quite hard for rivals to replicate them in other countries. Ant is also evolving as a company and its revenue from tech service fees will likely grow much bigger, as it’s opening up its platform to other financial firms such as smaller banks.”

Ant Financial is already the largest online payments service in China. In addition, it controls the biggest money market fund in the world. And, according to Bloomberg calculations, the company experienced a 65 percent rise in pretax profit in its fiscal year that concluded in March.

The news comes as Ant Financial, the payment affiliate of China’s Alibaba, has seen its consumer lending business reach 600 billion yuan ($95 billion) even as the company faces a stricter environment for securitizing loans in its home country of China.

According to news from Bloomberg, Ant Financial’s lending division, which provides loans to consumers through its Huabei and Jiebei units, has doubled since the start of 2017 until March 2018. The uptick in consumer lending comes as the Chinese government is lowering quotas for new asset-backed securities that enable these loans to be issued. The loans can have annual interest rates that are as much as 15 percent, although a person familiar with the matter told Bloomberg the interest rates on the loans are typically less than 15 percent.

Recently, regulators in China has been making it tougher for online companies to create asset-backed securities. The government is going after the 11 trillion yuan online cash, microlending market that has been criticized because the loans on offer usually come with high interest rates.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 edition of the FI Innovation Readiness Playbook examines how the innovation playing field is leveling as small FIs implement bolder strategies and larger banks adopt more measured approaches.

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