Alibaba Group Holding Limited (NYSE: BABA) affiliate Ant Financial, which is China’s most valuable online finance company, is currently in talks with banks to raise around $2 billion to $ 3 billion in debt to fund international investments and acquisitions. Alibaba founder Jack Ma controls Ant Financial. They also run the Chinese payment service Alipay and are involved with Chinese digital banking service MyBank. Alipay is China’s dominant digital payment service with 450 million users. Last month the company announced that they plan to acquire U.S. payments firm MoneyGram for $880. Ant Financial is paying $13.25 per share for MoneyGram International, Inc. (NASDAQ: MGI). The deal is expected to close in the second half of the year.
The Chinese financial technology firm is raising the money in dollars rather than renminbi so it can fund the $880 million purchase of U.S. payment firm MoneyGram. MoneyGram which is based in Dallas is a service that deals with currency transfers and remittance payments in close to 200 countries. MoneyGram claims to have 350,000 brick and mortar stores. In 2015, the company made $1.4 billion in revenue, but only 13 percent came from digital transactions which shows the company’s big offline presence.
A representative of Ant Financial told news agency Reuters that, “It is the market practice for a globalized company like Ant Financial to raise debt in U.S. dollars.”
Bloomberg has reported that the company is close to raising the $3 billion in debt financing for further acquisitions. Ant Financial is on top in China’s online payment market, but has been up investment overseas amid fierce rivalry at home with peers like Tencent Holdings Ltd’s popular WeChat Pay. The company has investments in Indian mobile payment and e-commerce website Paytm and Thai financial technology firm Ascend Money.
After a $4.5 billion funding round last April, Ant is now valued at about $60 billion. It’s investors included sovereign wealth fund China Investment Corp (CIC), CCB Trust, a subsidiary of China Construction Bank, China Life, China Post Group, China Development Bank Capital and Primavera Capital Group. Ant is set for an initial public offering (IPO) which the firm has not release a timeframe or listing venue. Alibaba smashed analyst estimates in its last quarterly report which shows the company is performing well. Ant is eschewing the path taken by Alibaba which held a record U.S. IPO with $25 billion in 2014.
According to Thomson Reuters LPC data, last year, in three separate loan deals, Chinese Internet giants Alibaba, Baidu Inc and Tencent raised a combined $10.4 billion. Tencent also raised $3.5 billion in bank loans in October to fund its acquisition of Supercell, the Finnish maker of hit game ‘Clash of Clans’.