On Friday, Ant Financial, the financial services affiliate to the Chinese e-commerce giant Alibaba Group, confirmed it closing a Series A funding round that includes investment from China’s largest pension fund, the National Social Security Fund (NSSF). The amount invested remain undisclosed but it is understood to value it at more than $50 billion. The NSSF now has a 5% stake in Ant Financial.
Ant Financial startup that operates Alipay, Alibaba’s payment business and Yu’E Bao, its wealth management product, has more than 400 million active users and 17 million overseas users. It also runs a private Internet bank called MYbank. The company has recently started to experiment with credit scoring, using criteria such as consumers’ online payment history to assess their credit worthiness. The credit agency, Sesame Credit, is looking to widen its services and product to banks, companies and embassies, said the company in a statement.
The announcement comes soon after the company obtained permit to start works of its Internet bank, Mybank, in June. “We want to become the strongest growth engine for global Internet finance, ” said company’s new President Eric Jing. He also added, “We want to help more number of smaller businesses, consumers and partners and spark innovation,” at his interview with foreign media.
The bank will now provide loans less than 5 million yuan to small enterprises, entrepreneurs and consumers as they are not served well by the country’s state-owned banks. The approval of Mybank and Tencent’s Internet bank Webank, raised hopes that Beijing will accelerate reforms of its stodgy financing sector.
Apart from this, the company recently moved to online-to-offline strategy and logistics where it partnered with Alibaba to invest $1 billion into a new venture called Koubei. It also launched “Le Ye Bao,” which permits businesses to buy insurance cover for employees at a lesser rate, said Jing.
Ant Financial is now looking at foreign markets too, after confirming plans to offer financial services to other countries outside China. The company has already began to invest outside starting with buying a 25% stake in India’s Paytm, in a deal valuing the payments firm at more than $1 billion. The outside investment is expected to continue following this Series A round.
Since, Ant Financial’s inception in 2004, it has grown to become the China’s largest online provider of financial services. The exponential growth could be the reason for the investors to be drawn to the company. 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 the country.