Jack Ma's Real Prize

Buying a stake in Caixin would hand Alibaba's Ant both news and financial information.
Updated on

Of the dozens of investments that Alibaba has made over the past few years, purchasing a stake in China's Caixin Media could be the smartest of all.

Media reports today say that Alibaba affiliate Ant Financial is in talks to buy a share in the Beijing-based magazine publisher. At first glance, this may remind observers of Alibaba Chairman Jack Ma's Bezos-esque move into the South China Morning Post.

Acquisitive Alibaba

Alibaba has made or announced more than 70 deals or investments to date

Source: Bloomberg data *Alibaba was among other investors in target

But there are key differences. Caixin's pedigree is financial as well as distinguished. Its Editor-in-Chief Hu Shuli is one of China's most respected journalists and commentators. She founded Caijing magazine in 1998 before leaving in 2010 to start Caixin, which counts the well-regarded Century Weekly magazine among its stable.

The fact that dozens of staff followed Hu from Caijing to Caixin is testament to the respect she commands in China's fractious and fraught media landscape. To get a sense of her editorial bent, one need only look at the first edition of Century Weekly under her stewardship. The Wall Street Journal noted at the time its cover story on looming inflationary risks and another article hinting at the governance-spurred reshuffle of executives at one of the nation's publicly traded state-owned banks.

Ant, the holding company for Alibaba's Alipay platform, wouldn't just be after the media organization for its financial news. Its broad spectrum of information is the real draw, and likely what attracted Tencent in an earlier funding round. Caixin said in a statement Wednesday that it's in talks for another round, and declined to disclose the investors. 

Ant, which is 38 percent owned by Alibaba and controlled by Ma, changed its name from Alipay last year to better reflect Ma's desire to move the company beyond a payments platform and toward a fully fledged e-commerce business. Its full name -- Zhejiang Ant Small & Micro Financial Services Group -- hints at what he's building.

Beyond Alipay, Ant offers loans to small enterprises, operates money-market fund Yu'E Bao, and is creating a credit-ratings firm, Sesame Credit, from data collected across Alibaba's businesses. Alibaba Vice Chairman Joe Tsai even boasted that a credit score from Sesame can speed up visa processing.

Alipay Dominates Payments

Although its share has dropped, Alipay remains the leader in China's third-party payments market

Source: Bloomberg Intelligence, iResearch

Recent moves by Caixin -- which translates as `financial news' -- play into Ma's grand plan for Ant. In June, it took up sponsorship of Markit's China Purchasing Managers Index after that indicator was dropped by HSBC. Reuters at the time cited Hu as saying this was a ``very important step'' in Caixin's quest for a ``strategic transformation.'' Reuters said the deal could lead to further cooperation on financial data and other services for Caixin.

Five months later, Caixin announced that its new think tank, China Insight Group, acquired a controlling stake in China Chengxin Information Technology. China Insight also partnered with CEBM Group to build a financial information services platform. In a statement outlining that transaction, Hu said that ``Caixin wants to build itself into a comprehensive information group that combines the features of Bloomberg and the Economist Group.'' (Bloomberg LP, the parent of Bloomberg News, competes with Caixin to sell news and data in China.)

In a short time, Caixin has gone from reporting on inflation to providing key economic indicators, a statistics database and financial research. Little wonder Jack Ma's interested: information is China's most precious commodity.

(Adds detail of Caixin C-funding round in fifth paragraph.)
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Tim Culpan in Taipei at tculpan1@bloomberg.net

    To contact the editor responsible for this story:
    Katrina Nicholas at knicholas2@bloomberg.net

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