Ant Financial is the world’s most valuable private FinTech company, and grew out of Alipay, the payments system founded by Alibaba in 2004. It also owns Yu’e Bao, the world’s largest money market fund, and Sesame Credit, a credit-rating system.
However, in 2011 Jack Ma, Alibaba’s founder, transferred Alipay out of Alibaba into an entity that he controlled, triggering a dispute with Yahoo and Softbank, two of Alibaba’s largest shareholders at the time. Ma claimed that Alipay would not be permitted to conduct business in China while it had foreign owners but eventually the profit-sharing deal was struck, as well as an agreement for Alipay to pay Alibaba royalties for software services.
Alibaba proposed the restructuring, which sought to exchange the right to 37.5% of Ant Financial’s pre-tax profit for a 33% equity stake, in February 2018 as it looked to place the payments affiliate in a public listing. But the government slowed the process whilst analysts speculated that Beijing was deciding whether its tech champions had amassed too much power and influence.
The completion of the restructuring clarifies the ownership structure of Ant, although the issue of new equity for Alibaba will dilute investors such as Singapore investment arm Temasek Holdings, which coughed up an aggregate $10 billion in a fund raising in May last year that valued Ant at $150 billion.
Maggie Wu, Alibaba’s chief financial officer, said the move would result in greater synergies coming from “the whole Alibaba economy” as Ant users availed themselves of Alibaba’s shopping and entertainment platforms, and vice versa. Some 20% of new users to e-commerce platforms Taobao and Tmall came from Ant, she said.
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