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Alibaba’s Ant Financial Closes Private Placement of Shares, Valued at $50 Billion

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Ant Financial, the financial services affiliate of the Chinese e-commerce giant Alibaba Group, today announced the closing of a financing round led by the country’s National Social Security Fund(NSSF), valuing the company at around $50 billion.

The round was led by China’s state-owned National Social Security Fund, with participation of major Chinese insurance corporations and other strategic investors.

Ant Financial, which runs Alibaba’s payment business Alipay and its wealth management product Yu’E Bao, has more than 400 million active users and 17 million overseas users.  It operates Alipay, the country’s dominant online payment platform; a private Internet bank called MYbank. Ant Financial is also a major share holder in PayTM’s parent One 97.

It is the first major private placement for Ant Financial, which gave no financial details of the deal. As per sources, NSSF has around 5% stake in the company. In a round completed last month, Ant Financial sold about a 12.4 percent stake to external investors including the National Social Security Fund.

Jack Ma says that he spun off Ant Financial from Alibaba in 2011 because of Chinese rules that were set to restrict foreign ownership of financial services entities.

Notably, this announcement comes days after Ant Financial received permission to begin operations of its Internet bank, Mybank, in June. The bank will issue loans under 5 million yuan to small enterprises, entrepreneurs and consumers, as they are traditionally underserved by the country’s state-owned banks.

Also, Ant Financial recently shifted to online-to-offline strategy and logistics where it teamed up with Alibaba to invest  $1 billion into a new joint venture called Koubei. The company also introduced “Le Ye Bao”, which allows businesses to buy insurance cover for staff at a relatively cheaper rate, said Jing, who was formerly Alipay’s chief financial officer.

Investors, as is known, are perhaps drawn by Ant Financial’s exponential growth. Since it began life as Alipay in 2004, the company has become the China’s largest online provider of financial services. Analysts say Ant Financial’s valuation is huge because it had an early start in online payments and because it is already a dominant player in China.


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