Formally known as Zhejiang Ant Small & Micro Financial Services Group Co., Ant Financial operates Alipay as well as money market funds and credit scoring. It’s based in Hangzhou, China, the same hometown as Alibaba.
Alibaba Vice Chairman Joe Tsai said Ant is profitable in three key businesses of payments, wealth management and lending to consumers and small and medium sized businesses. No decision on an IPO venue has been made, Chief Financial Officer Maggie Wu said on a conference call.
Ant Financial paid Alibaba about 2.09 billion yuan ($332 million) in royalty and technology fees in fiscal 2017, up about 86 percent from the previous year, according to a 2017 Alibaba filing.
Once dominant in China, Alipay’s share of online payments in the country has slumped to 54 percent as of the end of September amid the rise of Tencent’s WeChat platform, according to research firm Analysys International.
Ant Financial was valued at $74.5 billion in 2016 by CLSA and the company almost doubled earnings in fiscal 2017 as it expanded its footprint in wealth management and overseas markets. Thursday’s announcement comes just a few months after China took a major step toward opening its financial system by relaxing some of the rules on foreign ownership. The deal will likely be subject to regulatory approval.
Cryptocurrencies have received almost all of the media attention over the last year in the fintech sector but online payments companies like Ant Financial. PayPal, Visa, Mastercard etc also represent disruptive forces for the financial sector. Part of the reason for that is because they command high fees and rolling out new products is comparatively easy.
AliPay is the truly valuable part of Jack Ma’s empire and it is likely to garner significant investor interest if they pursue an IPO.
Paypal pulled back overnight following Ebay’s decision to go with privately held Adyen as its primary payments partner. The share will need to hold today’s low if the medium-term uptrend is to be given the benefit of the doubt.
Visa’s uptrend picked up pace from the end of December and it has paused this week along with the wider stock market. announced earnings last night not least because of the fees still charged in the sector.
Mastercard also announced earnings today and it saw a boost from customers using their cards to buy cryptocurrencies. The share moved to a new high today but is increasingly overextended relative to the trend mean.
Worldpay remains in a consistent medium-term advance where it has found support in the region of the trend mean on successive occasions but is now susceptible to some consolidation.