Sources: Alibaba’s US$60b Ant seeks expansion ahead of listing
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INVESTORS gearing up for the initial public offering of Ant Financial, the US$60 billion online finance arm spun off by e-commerce giant Alibaba, will have to wait until at least late 2017 as the business puts growth first, sources say.
Sources with knowledge of the plans said Ant Financial, whose anchor business is Alipay, China’s largest online payments service, is focusing on expanding its existing 450-million-strong army of daily users, adding merchants and customers.
One of the sources said that, as of last month, Ant had yet to contact Chinese regulators to start the lengthy listing process and join a queue of more than 700 firms waiting to list.
An Ant spokeswoman said the group had not set a timetable or location for its listing, and the China Securities Regulatory Commission did not comment.
In addition to online payments, Ant Financial also offers services from wealth management to credit scoring, micro lending and insurance.
Alibaba Group set up Alipay in 2004 in the PayPal mould, to help Chinese buyers shop online, and later spun it off ahead of its own listing in 2014.
At its last fundraising round in April, Ant’s valuation topped US$60 billion — just short of the market value of Wall Street bank Goldman Sachs. Its listing has been among the most keenly awaited of recent years.
It reshuffled top management at the weekend, which Alibaba founder and Chairman Jack Ma said yesterday in Bangkok signaled a listing was in prospect at some point.
“We will be looking at an IPO in the next few years; we are not yet sure where we will list or when exactly,” Ma said.
The sources said Ant intends to list both in China’s mainland and Hong Kong.
The two applications could be simultaneous, though a shorter waiting time could also mean that Hong Kong-listed H shares could come to market first, the sources said.
“Unicorn” startups — those worth more than US$1 billion — are often short on cash, but not Ant Financial. It raised US$4.5 billion in a record funding round in April, backed by China’s sovereign wealth fund China Investment Corp and a subsidiary of China Construction Bank.
It also turns a significant profit.
New York-listed Alibaba does not have a direct stake in Ant, due to Beijing’s restrictions on foreign companies owning Chinese financial institutions, but it has a 37.5 percent profit-sharing agreement. According to Alibaba filings, Ant paid it US$56 million in royalty and software technology service fees in the June quarter.
For growth, Ant is concentrating on expanding a user base that already outnumbers the population of western Europe, growing in China and abroad, where it has focused on partnerships and also wants to capture spending by Chinese tourists when they travel.
In 2015, Chinese tourists spent US$215 billion overseas, according to the World Travel & Tourism Council.
None of the sources spoke on how long the growth plan to boost customer and merchant numbers could take, the possible impact on profits, or if there were specific targets to hit before the group thinks it’s ready to list.
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