Company tapped state lenders and financial firms for most of its record-breaking $4.5 billion funding round
The financial affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd., whose leader, Jack Ma, once made headlines for squaring off against the country’s banks, is now building ties with them.
Ant Financial Services Group—the operator of China’s answer to PayPal—tapped state lenders and financial firms for most of its record-breaking $4.5 billion funding round, which closed Tuesday, valuing the privately held company at roughly $60 billion. The round was led by sovereign-wealth fund China Investment Corp. and Chinese state lender China Construction Bank Corp. , and it comes a year after another nearly $2 billion funding round that drew the country’s National Social Security Fund and big state insurers.
The growing investment from state financial companies underscores the increasing importance of Ant Financial in China’s financial system. Just two years ago, the company, which is controlled by Mr. Ma, was considered a scrappy outsider whose popular financial offerings—particularly an online investment fund called Yu’e Bao—were at times a cause of friction with Chinese banks.
“What determines success in the market shouldn’t be the monopolies and those with power, but the consumers,” Mr. Ma said in early 2014, after a number of state lenders put limits on how much depositors could transfer to Ant’s payments platform, Alipay. China Minsheng Banking Corp. ’s then-chairman, Dong Wenbiao, in turn questioned Alibaba’s financial ambitions at the 2014 Bo’ao Forum in southern China: “I said to Jack Ma, ‘Give up your reform efforts. You don’t have the ability.’ ”
Now, Ant is one of the most highly valued private technology companies in the world and its Alipay service handles an estimated 58% of all online payments in the country, according to Credit Suisse Group AG. It has also started an online lender, MYBank. Some of those same Chinese state institutions are investing billions of yuan in Ant, and stand to benefit from its success and the future riches an initial public offering could bring.
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