AVCJ Awards 2018: Deal of the Year - Late Stage Technology: Ant Financial

Warburg Pincus’ participation in the Series C found for Ant Financial in June was unusual because it drew on contributions from three different funds. In addition to investing through its global flagship fund, the private equity firm committed capital from two companion vehicles that focus on China and financial services, respectively. It was deal that ticked all the boxes.

Ant Financial also consumed a lot of capital. The round amounted to $14 billion, making it the largest single fundraise by any company in the world. The valuation was around $150 billion, almost double the market capitalization of Goldman Sachs. GIC Private, The Carlyle Group, Silver Lake, General Atlantic, and Canada Pension Plan Investment Board were among the investors taking part alongside Warburg Pincus. Some of them also contributed to Ant Financial’s Series B in 2015, which saw the company raise $4.5 billion at a valuation of $60 billion.

Accepting the award for Deal of the Year – Late Stage Technology, Ben Zhou, a managing director at Warburg Pincus, said the firm was “honored to be part of Ant Financial’s journey to transform China’s tech-enabled financial services.” That is what all investors coming in at such a high valuation are betting on: the ability of this company – said to be the most uniquely positioned fintech business in the world – to have a transformative impact on a large sector still dominated by traditional institutions.

Established as the payment gateway for Alibaba Group’s e-commerce properties, Ant Financial spun out in 2014 and has since morphed into a technology-enabled ecosystem with a wide reach. Alipay has become one of the two default mobile payment options in China for everything from buying movie tickets to settling utility bills. Wealth management app Ant Fortune enables customers to access products like Yu’e Bao, China’s largest money market fund; Sesame Credit tracks spending, consumer and social habits to provide credit assessment services; and Ant Financial Cloud is becoming increasingly important as an enterprise services platform that targets mainstream financial institutions.

As of March, the company was serving more than 15 million small businesses in China and – together with its global joint venture partners – 870 million users worldwide. It posted RMB9.18 billion ($1.43 billion) in pre-tax profit for the 2018 financial year, up 65% year-on-year. Only Tencent Holdings-owned Wechat Pay comes anywhere close to Ant Financial’s level of dominance within China.

The company has made an aggressive push into overseas markets and the Series C will support these ambitions. While an acquisition of US-based remittance business MoneyGram was abandoned due to regulatory opposition, partnerships with other fintech businesses – from Paytm in India to Ascend Money in Thailand – are flourishing. Ant Financial will also continue developing blockchain, artificial intelligence, security, and internet-of-things capabilities.   

Pictured: Ben Zhou of Warburg Pincus

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• Topics
• Greater China
• Technology
• Financials
• Expansion
• China
• Growth capital
• TMT
• Ant Financial
• Warburg Pincus Asia
• AVCJ Awards