Ant Financial, the financial arm of Alibaba specializing in wealth management, nearly doubled its profit during its 2017 fiscal year in part because of its mobile payments feature.
According to a Bloomberg analysis of Alibaba’s recent filing, Ant Financial saw a 86 percent jump in pre-tax profit to $814 million in the fiscal year that ended in March. Ant Financial operates Alipay, the popular mobile payments service in China. Bloomberg noted the strong showing on the part of Ant could spark interest in its potential initial public offering of the company, which could happen sometime in 2018. It also comes amid dealing making and expansion for the financial company. Ant Financial is in the process of acquiring MoneyGram in the U.S. and has been branching outside of China in places such as India and South Korea. The company started AliPay in 2004 and, according to Bloomberg, has since seen it grow to control more than half of the $5.5 trillion mobile payments market in China. For Alibaba, the results during FY2017 are also a win given that Bloomberg reported that the company gets 37.5 percent of Ant’s pretax earnings.
The report noted it paid the eCommerce giant around 2.09 billion yuan in royalties and technology fees, which is around 86 percent higher than the year earlier. Alibaba is also poised to benefit when the financial unit goes public, given that it is entitled to around one-third once it begins trading. The company could opt to get a one-time payment that is worth 37.5 percent of the value of the unit based on the IPO. Bloomberg said it could be $28 billion given that Ant Financial is reportedly valued at $74.5 billion.