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Alibaba Spin-Off Ant Financial Raises A Monstrous $4.5 Billion In Series B

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Ant Financial, a spin-off of the famed Alibaba Corporation has managed to land an impressive a monstrous,$4.5 billion in it series B round of funding. The amount is even more impressive than it sounds and indeed, is the biggest ever funding round in the history of consumer technology.

For those who are unfamiliar with Ant Financial, the company is behind China’s most popular mobile wallet Alipay, among other things. And those ‘other things’ include an offer half a billion worth of investment into Paytm.

Alipay is similar to India’s Paytm — but on a larger scale — and has almost 450 million monthly active users. The online wallet offers consumers the ability to make online purchases and pay their way through a wide variety of situations including in-store cashless payments, buddy-to-buddy transfers etc.

The wallet offers other services as well, including an online personal wealth fund, insurance etc. The wallet is also known for operating the online-only MYbank.

The current round was led by China Investment Corp Capital and CCB Trust, and also saw participation from other existing investors including China Life, China Post Group, China Development Bank Capital, and Primavera Capital Group.

Speaking on the investment, the firm said,

This new round of funding will support Ant Financial in its goal to expand access to financial services in China’s rural areas, while also fuelling the company’s globalization.

Meanwhile, Alibaba — which spun-off Ant Financial back in 2011 —  is also set to profit from Ant’s ventures, thanks to an agreement made between the companies at the time of the spin-off –that received much media attention due to the Yahoo-Alibaba controversies that took place around that time.

Under the terms of the agreement, Alibaba receives upto 37.5 percent of Ant Financial’s pre-tax profit, but it also stands to receive upto 37.5 percent received, in case the latter should ever go for an IPO — This even though Ant is not included in Alibaba’s listing on the New York Stock Exchange.

Ant Financial’s association with such large amount of cash isn’t new though. Close to a year back — in July last year — Alibaba’s financial arm had 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.

As for markets, besides China, India is Ant Financial’s main forte. The company is focusing on payments solutions here as well and owns substantial stakes in Paytm payments solutions. The company has been receiving tough competition lately, from domestic players as well as the likes of Apple Pay. The investment is sure to help it move aggressively to capture more share. It will be interesting to see if it uses the tried strategy of offering discounts on its payments platforms to increase user engagement or goes for marketing, upgrading and popularizing its solutions.

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