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11 June 2018

Big Deal: Ant’s crawl to $14bn round signals bipolar world

The market for scaleable global champions has clearly bifurcated in the past five years from being primarily US champions with a smattering from other regions to a bipolar innovation capital world of America and China.

Author: James Mawson, Editor-in-chief

There is an unbelievable-if-it-wasn’t-true chart in Mary Meeker’s annual internet trends presentation showing China mobile payments volume growing 209% year-on-year to almost $16 trillion by the end of last year.

The near-doubling in growth rates – not volume – has seen two clear winners in the world’s most advanced and largest mobile fintech market: Tencent’s WeChat Pay and Ant Financial/Alibaba’s AliPay.

Venture capitalist Meeker’s presentation, based on data prepared by local firm Hillhouse Capital, shows AliPay at 54% of China’s mobile payment share and WeChat Pay at 38%.

China mobile payments

Ant Financial, the China-based financial services affiliate of e-commerce group Alibaba, on Friday said it had raised about $14bn in a series C round backed by a who’s who of international financiers as well as local leaders.

Singapore’s sovereign wealth funds GIC and Temasek backed the US dollar-denominated tranche, which was also backed by Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake and General Atlantic. Carlyle Group, Janchor Partners, Discovery Capital Management, Baillie Gifford, Primavera Capital and funds and accounts advised by T Rowe Price Associates have also provided capital to Ant, as has Malaysian sovereign wealth fund Khazanah Nasional. Sequoia Capital China and BlackRock were reported as participating in the round

The renminbi-denominated tranche was largely provided by existing, unnamed investors.

The equity round, which stands as the largest ever raised by a private company, will allow Ant Financial to accelerate the global expansion of Alipay, with an initial focus on India, Thailand, Korea, the Philippines, Indonesia, Hong Kong, Malaysia, Pakistan and Bangladesh.

The cash will also go towards the development of new technology, with a key focus on blockchain, artificial intelligence, the internet of things and security.

Ant’s valuation has not been confirmed, but has been reported to be $150bn, compared to $60bn it had in 2016 when it raised $4.5bn from investors including postal service China Post and insurance provider China Life.

Meeker in her identification of the top 20 worldwide internet leaders today also said Ant was worth $150bn, making it ninth on the list. Of these leaders, nearly half (nine) were effectively non-existent five years ago but the rise in all 20’s aggregate market value has been more than $4.3 trillion in this period reflecting investors’ attention on growth as the driver of value in this part of the economic cycle.

Similarly, nine of these top 20 are from China, with the remainder in the US. The market for scaleable global champions has clearly bifurcated in the past five years from being primarily US champions with a smattering from other regions to a bipolar innovation capital world of America and China, although the US still retains the top five spots for now.  

How these two innovation centres work with or in competition with each other could have geopolitical ramifications given the companies are effectively the size and resources of now fairly large states.

Global Corporate Venturing, which will host its GCV Asia Congress in Hong Kong on 20 September with leaders from Alibaba and Tencent's corporate venturing funds.

top 20 internet companies

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