Alibaba is picking up 33% of Ant Financial, its fintech affiliate that’s valued at over $60B: Alibaba has included an extra perspective to the announcement of its most recent financial statement today with a press that it must be acquiring a 33 percent share in Ant Financial, it’s fintech affiliate that runs Alipay and various financial services.
The deal, which both sides said comes from a contract formed in 2014, will see Alibaba get newly issued shares in Ant, apparently making the way for a public listing. It will also make an ending to a profit-share contract which saw Ant give Alibaba “royalty and technology service fees” equal to 37.5 percent of its pre-tax earnings each quarter.
The contract will offer Alibaba immediate acquisition of Ant that is priced at over $60 billion. However, a bit confusingly, Alibaba said the offer will have no cash effect on its business once completed. Alibaba seems to be paying with IP, or even more adequately: it is obtaining the shares “in exchange for several intellectual property rights belonging to Alibaba solely associated with Ant Financial.”
“An equity stake in Ant Financial lets Alibaba and our investors take part later on increase of the financial technology market, along with the advantages of user growth and increased customer experience,” Alibaba Group President Daniel Zhang said in a report.
The first response was not quite positive, but, with Alibaba’s stock price falling immediately after the news.
Alipay is China’s most favored mobile payment wallet, however, Ant also runs a good investment fund, micro-loans, insurance services, an electronic bank and much more. Once and for all, it states to attain over 450 million users through its products.
Ant and Alibaba have long-term work relationships – such as joint taking part in investments like Paytm in India – which new percentage of shares is yet another sign that Ant may be consistent to go public soon. Ant had been going to list last year, however, it preferably decided to tackle $3 billion in debt financing to bankroll a number of expansions that setup financial services products in Southeast Asia, Japan, Korea and beyond. A transfer to the U.S. fell apart, but, when it was not able to secure governmental acceptance for a recommended $1.2 billion purchase of cross-border payment provider MoneyGram.
If Ant is chosen to go public eventually, it may just list in Hong Kong. Alibaba CEO Jack Ma not too long ago stated the company would think of listing a few of its several affiliates in the city-state and Ant may be on top of this list.
“Ant has no certain listing programs or schedule to have an IPO,” a representative told TechCrunch.
Hong Kong is increasing strength as a tech IPO destination with gaming hardware organization Razer and Tencent’s China Literature e-book unit both having prosperous listings last year.