Alibaba’s internet financial affiliate Ant Financial has sealed a private investment deal from China Post Capital, the state-owned investment institution of postal service China Post Group Corp., making them the second largest strategic shareholder in Ant Financial. The two parties already began a strategic partnership last June.
The investment comes after an undisclosed amount of A round led by China’s National Social Security Fund (NSSF), a deal which valued the Alibaba spin-off at $45-$50 billion USD. The social security fund holds a 5% stake in Ant Financial.
Ant Financial operates a series of financial businesses ranging from the country’s most popular payment service Alipay, mutual fund service Yu’e Bao to online credit scoring service Sesame Credit. It has also received the license to run an internet bank, Mybank, which can issue limited loans.
One of the reasons the investment is so valuable is that it may tighten the alliance between Ant Financial and Postal Savings Bank of China (PSBC), the wholly-owned commercial bank of China Post Group Corp. As China’s largest bank by outlets, PSBC has 40,000 branches around the country, offering micro-credit to China’s underserved small businesses and individual borrowers.
The vast offline resources of PSBC, especially in towns and villages, is expected to facilitate Ant Financial’s rural expansion in its attempt to shake up China’s conservative finance sector.
The two companies are also in discussion on cooperation between China Post and Alibaba Group as well as wider applications for Alibaba’s Cainiao logistic system in rural areas.
PSBC is reportedly preparing for an IPO next year, which could raise around $25 billion – the record for an IPO set last year by Alibaba Group. Ant Financial, Singapore’s Temasek Holdings and French bank BNP Paribas and several U.S. PE institutions are reportedly among the preliminary bidders for PSBC’s pre-IPO stake.
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