China's Ant Financial invests $200m in Kakao payment unit
Ant Financial, the financial services affiliate of China’s Alibaba Group, has agreed invest $200 million in a dedicated mobile finance platform that will soon be launched by South Korean internet giant Kakao Corp.
The investment is part of a larger strategic partnership that will see Ant Financial’s range of digital financial services – in addition to the Alipay mobile payment platform, the company provides credit, insurance and wealth management products – rolled out in Korea through Kakao Pay. Alipay’s 34,000 merchants will also be merged into the Kakao Pay system, giving them access to a much larger customer base.
Kakao Pay already has more than 14 million users and its service offering have evolved from payment transactions to include bill payment, remittance and membership management. In January, the company’s board decided to spin out the business into a separate entity. It will be led by Young-Joon Ryu, who currently heads up Kakao’s fintech division.
“The combination of Ant Financial’s global payment platform Alipay and numerous financial and commerce service networks and Kakao’s platform capabilities will result in more effective and convenient financial solutions for both businesses and consumers,” Ryu said in a statement.
Kakao is the product of a 2014 merger between Kakao and Daum Communications, Korea's top mobile messaging provider and one of its leading web portals, respectively. The company has 48 million users and positions itself as a diversified communication platform, with services ranging from messaging and email to gaming and mobile payment. Last December, a consortium led by Anchor Equity Partners committed KRW125 billion ($107 million) to Podotree, Kakao’s mobile content platform.
Ant Financial, which has received substantial funding from private investors, has more than 450 million users globally. While the bulk of these are in China, the company has entered other markets through investments in local peers, such as Patym in India and Ascend Money in Thailand. Last month, it agreed to acquire North America-centric money-transfer service provider MoneyGram, facilitating an exit for Thomas H. Lee Partners.
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