Saturday 1 October 2016

Worth more than Goldman sachs: how Jack Ma's little Ant became a $75bn giant

Lulu Yilun Chen

Published 22/09/2016 | 02:30

Jack Ma, the billionaire chairman of Alibaba, which controls Ant
Jack Ma, the billionaire chairman of Alibaba, which controls Ant

Alipay got its start in 2004 as a way for the customers of Alibaba Group Holding to more easily buy goods online. Now the business's parent company may be worth $75bn, or more than Goldman Sachs Group.

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That's the conclusion of Elinor Leung, the head of telecom and internet research at CLSA in Hong Kong. The number may not even sound that outlandish: Ant Financial, Alipay's parent company, was valued at about $60bn in June when it raised $4.5bn, people familiar with the matter said at the time.

Leung estimates that most of Ant Financial's value is in Alipay, China's most popular online payment service, with a projected worth of $50bn.

Its micro loans service is probably worth another $8bn, while Ant's wealth management unit is given a valuation of $7bn.

The rest of Ant Financial's valuation comes from investments and cash on hand, outstripping Goldman's roughly $70bn market value as of this week.

"Alipay has a very strong leadership in terms of online payment ecosystem," Leung said. "Alipay is not just for payment." It is also a "big distribution platform for Ant Financial's other products."

The company could grow to $100bn in two years, as the current valuation doesn't include growth brought in by insurance, credit scoring and cloud computing, Leung said.

Ant Financial is considering an initial public offering in Hong Kong in the first half of next year, people familiar with the matter said last month. If it goes ahead, Ant Financial could rank among Hong Kong's largest debuts ever.

Even a 10pc float, lower than average for the city's market, could end up raising $6bn based on Ant's June-round valuation.

Ant is controlled by Alibaba's billionaire chairman Jack Ma and Alibaba would benefit from such an IPO through either an option to buy a one third stake or a one-time payment. (Bloomberg)

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