Investors gearing up for the initial public offering of Ant Financial, the $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. Ant had yet to contact Chinese regulators to start the lengthy listing process and join a queue of more than 700 companies waiting to list.
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 $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.
“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, however, said Ant intends to list both in mainland China and Hong Kong.
“Unicorn” start-ups – those worth more than $1 billion – are often short on cash, but not Ant Financial. It raised $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 $56 million in royalty and software technology service fees in the June quarter.