Alibaba Financial Affiliate Wants To Raise $1.5bn

The financial subsidiary of Alibaba is interested in raising $1.5bn from investors.

The financial affiliate of Alibaba Group is trying to raise at least $1.5bn (10 billion Yuan) in a second fundraising round before it planned IPO, a person aware of the matter told. Zhejiang Ant Small & Micro Financial Services Group, controlled by the Chairman and founder ‘Jack Ma’ has planned to issue shares to new and existing investors, a person stated who asked to be kept anonymous due to the confidentiality of the information.

The organization called Ant financial is talking to potential investors including insurance companies, private equity funds, venture capital firms, and other financial organizations. Challenging conventional banks, the web-based Ant financial is running the China’s largest online payment service provider, Alipay, and is able to control the corporation, which has been able to manage the biggest monetary-market fund of the nation with assets worth over 600 billion Yuan. It has also been able to own stake in a private online lending service provider, MYBank.

Ant Financial was estimated at worth around $45 billion after the completion of an initial fundraising round in June last year, the person stated. It might sell stocks in an initial public offering at the earliest in 2016 and has not been able to decide yet whether to conduct a third round of fundraising before.

Ant Financial might utilize funds from current financing for takeovers without being able to identify potential targets. It has been able to invest in organizations including the Postal Savings Bank of China and One97 Communications of India.

Spokesperson of Ant Financial, Miranda Shek, made a confirmation of the second round for financing while refusing to share views about the amount needed to be raised by the organization.

Ahead of Alibaba’s record breaking $25 billion IPO in September last year, it signed an agreement that was able to lock in the share owned by Huangzhou based corporation in the financial subsidiary’s pretax earnings and decide terms for Alibaba’s entitlements if Alipay or Ant Financial are able to hold an initial public offering.

In the initial funding round of the Alibaba’s financial arm, it spun off 12.4% of its stake to outside investors encompassing China Development Bank Capital Company and the national security fund of China.

This development has taken place at a time when Bloomberg has reported that the Alibaba-backed smartphone manufacturer Meizu Technology Corporation is intending to cut down its workforce by up to 5% of its approximately 4000  workers to enhance its performance as the growth of the industry has  cooled down.

Yuanta Securities analyst ‘Jeff Pu’ stated, “The mid to low segment of the smartphone market is shrinking. Even though Alibaba’s support helps Meizu price itself very competitively, it faces a challenge in hardware profitability.”