Alibaba Affiliate Said to Lift Target in Tech Funding

  • Ant Financial raised its target to more than $3.5 billion
  • China’s sovereign wealth fund, CCB vehicle to lead investment

Alibaba Group Holding Ltd.’s finance affiliate has increased the amount it’s raising to at least $3.5 billion and gained the support of powerful state-backed investors in a record technology funding, according to people familiar with the matter.

Zhejiang Ant Small & Micro Financial Services Group Co., controlled by Alibaba’s billionaire founder Jack Ma, could be valued at about $60 billion, said the people, who asked not to be identified because the deal is being negotiated in private. China Investment Corp., the country’s sovereign wealth fund, and an investment vehicle of China Construction Bank Corp. are leading its latest round, the people said.

Ant Financial, as the company is known, increased its target after gauging demand from investors, the people said. It had sought to raise at least $1.5 billion in only its second round of financing ahead of a potential initial public offering, a person familiar with the matter said in January.

Ant Financial runs China’s biggest online payment service, Alipay, and controls the company that manages Yu’E Bao, the nation’s largest money-market fund. The company has evolved from an outsider in an industry that needed “stirring up,” as Ma described two years ago, to an online giant now working with the largest state-owned players. The sovereign wealth fund will join existing heavyweights including Construction Bank, the country’s second-largest lender, and the national social welfare fund.

Disruption’s Not the Goal

Ant Financial was said to be valued at about $45 billion after completing an initial round of fundraising in June 2015. It’s seeking more capital to bankroll an expansion and get into new services such as online banking, as rivals such as Chinese social networking giant Tencent Holdings Ltd. develop their own Internet financial offerings. Ant Financial has said it will go public but hasn’t stated a timeframe.

“We do not position ourselves as a disruptive player in the industry,” Cyril Han, vice president of Ant Financial, said at the Credit Suisse Asian Investment Conference in Hong Kong. “We work closely with both domestic and international banks to promote inclusive finance.”

Goldman Sachs Group Inc., JPMorgan Chase & Co. and China International Capital Corp. are advising Ant Financial on its latest fundraising, the people said. In its initial round, the company sold a 12.4 percent stake to outside investors including China’s national social security fund and China Development Bank Capital Co.

Ant Financial’s micro lending business handled about 30 billion yuan of loans as of January. More than 200 million users buy financial products through Ant Financial via services including Yu’E Bao and Zhao Cai Bao, a platform that lets small businesses and individuals borrow from investors, the company said in August.

Ant Financial declined to comment in an e-mail. China Construction Bank’s Beijing-based press officer declined to comment while an e-mail to CIC’s press office wasn’t replied to.

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