Alibaba’s Ant Financial to buy THL-backed MoneyGram

Ant Financial has offered to buy all common and preferred shares for $13.25 apiece in cash and assume or refinance MoneyGram’s outstanding debt, according to a filing. The price represents an 11.5% premium to the January 25 closing price. The stock closed up 8.75% at $12.92 on January 26. MoneyGram will continue to be based in Dallas and operate under its existing brand.

The deal promises to expand Ant Financial’s global network, which already includes partnerships with Paytm in India and Ascend Money in Thailand. MoneyGram’s North America-centric network of 2.4 billion bank and mobile accounts and 350,000 physical locations will be connected with the 450 million Alipay users and 180 million Patym users. Together they will serve more than 200 countries.

“The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the US, China, India, Mexico and the Philippines,” said Eric Jing, Ant Financial’s CEO.

While Ant Financial provides technology-based financial services such as payments, credit and insurance products to an Asian audience, MoneyGram offers bill payment services in the US and Canada and money transfer services globally, generating revenue from transaction fees and spreads on foreign-exchange rates.

MoneyGram spun out from its parent company Viad Corporation in 2004, one year after incorporation, and subsequently went public in the US. It ran into financial difficulty in 2008 and was rescued through a $1.5 billion recapitalization led by THL and Goldman Sachs. This included and equity commitment of $760 million for a 70% interest in the business.

They received additional shares and $218 million in cash on completion of a second recapitalization in 2011. Another liquidity event came in 2014 following further bank financing and then a secondary public offering and share repurchase that netted the two investors around $210 million. THL is currently the largest shareholder in MoneyGram with a 44.5% stake.

The company posted revenue of $1.43 billion in 2015, down from $1.45 billion the previous year. It recorded a net loss of $76.9 million, compared to a profit of $72.1 million in 2014. Long-term debt stood at $937.3 million as of September 2016.

Ant Financial was established in October 2014 and originated from Alipay, Alibaba’s third-party payment platform, which was launched in 2004. It provides other financial services under the Ant Fortune, Zhima Credit and MYbank brands. Last April, Ant Financial completed a $4.5 billion Series B round of funding at a valuation of $60 billion.

The MoneyGram transaction is subject to shareholder and regulatory approvals, including the Committee on Foreign Investments in the United States (CFIUS). It is expected to close in the second half of this year. Citi and Simpson Thacher are advising Ant Financial, while Bank of America Merrill Lynch and Vinson & Elkins are working with MoneyGram.

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• Topics
• Greater China
• North America
• Trade sale
• Financials
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• China
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• Thomas H. Lee Partners
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