Tuesday 20 February 2018

Ma's global payment ambitions are dented

Alibaba co-founder Jack Ma’s plans received a setback courtesy of the US legislature
Alibaba co-founder Jack Ma’s plans received a setback courtesy of the US legislature

Selina Wang and  Lulu Yilun Chen

Ant Financial may have to re-tool its global ambitions after stiff US opposition scuppered what would have been its largest overseas acquisition.

The Chinese financial services giant controlled by Alibaba co-founder Jack Ma abandoned a plan to buy MoneyGram International after failing to win approval for the deal from a key government panel.

China's largest online wealth management and payments service may have to throttle back plans to expand in the world's largest financial market as it begins preparations to go public in the next year or so.

The end of the bid comes almost a year after Ma met with then US president-elect Donald Trump and talked of creating a million US jobs. Ant Financial's $1.2bn (€1bn) deal for Dallas- based MoneyGram would have added a network of 350,000 agent locations in more than 200 countries and territories that it says reaches billions of accounts. The US company's shares plunged as much as 17pc in extended trading.

But the deal faced intense scrutiny from a government panel. Ant submitted its proposal to the Committee on Foreign Investment in the US several times, to no avail.

Last spring, two House of Representatives members said the acquisition could allow "malicious actors" to obtain data on US military personnel and their families who use the service.

Ant and Moneygram now plan to work together on initiatives in remittance and digital payments, they said in a joint statement.

"Technology companies understand the situation and are evolving in their approach. They are doing more things organically, they are doing more strategic alliances," Jeremy Choy, head of M&A for China Renaissance, said.

"We don't think this is the start of a trend where people just won't do things in the US. A lot of technology companies are becoming increasingly global, so they have to go to the US. But in terms of the approach, it will be less direct than finding a target and buying 100pc."

Ant Financial's Alipay controls roughly half of China's $5.5 trillion mobile-payments market and is eager to expand internationally. (Bloomberg)

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