Ant Financial To Be Valued At USD 50 Billion
摘要： After getting a mass amount of investment, Alibaba has been exploring different sectors. However, most of the entries are buy-ins, which means Alibaba doesn't really have absolute control over the enterprises it has penetrated.
It’s reported that Alibaba’s Ant Financial will complete a new round of financing in mid April, a deal is said to reach USD 3.1 billion that will make Ant Financial be valued at nearly USD 50 billion. According to reports, this is not the first time that Ant Financial receives financing. In July 2015, Ant Financial received a joint investment of RMB 12 billion funded by 8 companies, including National Social Security Fund, China Development Bank Security, China Life etc. In September 2015, Ant Financial received a strategic investment from China Post with 5% of its share in exchange.
Enterprises seek financing in accordance with their assessment on the business layout. After receiving two investments in 2015, Ant Financial subsequently starts expanding and planning further its business layout.
In September that year, Ant Financial poured in USD 150 million to buy in tech media 36 Kr, and later penetrated Tianjin Financial Assets Exchange and TEBON Securities. In December 2015, Ant Financial also bought in Postal Savings Bank Of China and entered the Internet finance market in South Korea through investing in Korean banks.
Besides that, recently rumor has it that Ant Financial is to invest in lottery service platform AGTECH and financial media giant Caixin. Acquisition can indeed directly help Ant Financial enter certain industries.
Apart from that, Ant Financial is refining its inner parts on the side: empowering financial scenes (in rural areas, medical sector, transportation field, and malls), improve the collection of cloud data from the Internet finance sector and the algorithm, carry out further ANTSDAQ.
9 pillars of Alibaba’s blueprint
After getting a mass amount of investment, Alibaba has been exploring different sectors. However, most of the entries are buy-ins, which means Alibaba doesn't have absolute control over the enterprises it has penetrated. For that, Ant Financial’s layout is centered around Alipay and businesses derived from that.
As it’s shown on the official website, Ant Financial’s main businesses are Alipay, Ant Credit, Ant Financial Cloud, Yu’eBao, Zhaocaibao, Ant Fortune, WeBank, and Ant Huabei, a range of businesses that covers the fields of payment and loan services of the traditional financial sector. Ant Financial’s main businesses can also be the fundamental base for further business expansion such as products like Ant Credit and Ant Financial Cloud.
In Ant Financial’s businesse, Alipay doesn't only serve as a single channel, it also connects Tmall, Taobao, and the life services it offers, through which Ant Financial’s wealth management service can spread naturally just like WeChat’s Licaitong. As payment scenes further develop and users gradually form the habit of using mobile payment, users will naturally put their money in Ant Fortune, Zhaocaibao, YuE’bao and even ANTSDAQ.
In the finance industry, it’s essential to have substantial supply of asset that is easy to get. But more importantly, the source of risks lies in the borrowers. To avoid risks, Ant Financial cooperates with traditional financial organizations. For example, Alipay teamed up with THFunds, making use of the high safety, liquidity, and stable interest rate that such organizations can offer to prevent risks. On the other hand, Alibaba has developed its own creditor's rights accordingly. In Alibaba’s system of creditor's rights, there is Ant Huabei that targets individual consumers as well as WeBank and ANTSDAQ that serve enterprises.
Unlike other Internet finance companies, Ant Financial has stronger binding power over its borrowers. Whether it’s individual consumers that loan money on Huabei, or businesses that borrowed money from WeBank, they are all the users of Alibaba’s platforms: They are all users of Tmall or Taobao.
In China, the e-commerce world is pretty much dominated by Alibaba, with almost every Internet shopper and business has more or less used Alibaba’s platforms. Besides e-commerce platforms, Alibaba’s payment tool is also the most influential and used one in the country. In this case, if the borrowers can’t pay back the loan in time, they will find themselves in a situation where their lives would be deeply affected by the consequences.
Furthermore, Alibaba have all the information of the borrowers, including address etc., which means it’s easy for staff from Alibaba to just knock on your door and ask you for the money.
When backed by relevant business scenes, Ant Financial will also put a lot of efforts in developing technologies, in hopes of attaining a double technological insurance. And thanks for the addition of e-commerce scenes, Ant Financial is able to profile borrowers and grade them on Ant Credit based on the data collected from the consuming behavior on e-commerce platforms with the use of financial clouds and relevant algorithm. After that, Ant Financial can determine whether to loan money to the borrower as well as the interest rate, limit, and repayment period in accordance with the result.
A giant ready to strike
Early as in 2012, Jack Ma had described to the world what Alibaba would turn out to be in the future: Alibaba would build platforms, enter the field of finance, and develop and utilize big data technology. And in its Platform+Finance+Big-Data blueprint, Ant Financial has already become a pillar of Alibaba’s ecosystem in the field of finance.
As the e-commerce market grows mature and consumers grow accustomed to online shopping, e-commerce platforms such as Tmall and Taobao are now profit-making machines that can generate a mass amount of revenue. But even under such prosperous scene, Alibaba still has to think about future plans to boost the sales performance since in a mature e-commerce market little effort is needed to have a good revenue result.
Similar to other enterprises that also need to expand their scope of business, businesses that have a low market share and profiting ability have become the priorities. However, compared to strategies that aim for direct engagement with other rivals and the development of multiple points, Alibaba’s main expansion strategy is the making of a complete ecosystem instead of building different and separate lines of business.
Alibaba’s three future main fields, platforms, finance and big data, are highly related to each other, meaning they will benefit one another as they develop. E-commerce is the foundation and entry point of the whole Platforms+Finance+Big-Data strategy. Finance can provide e-commerce businesses with added services and become a new profiting point, while big data is a strategic tool that can serve as analytical reference for the finance and e-commerce sector.
During the process of online shopping, structured and non-structured data will be recorded, such as consumers’ personal information, the category of the purchased items, and browsing time etc. And as consumers start to shop online more often, the credibility and abundance of the data will increase.
With this mass amount of data, Alibaba can target consumers with the adequate advertisement using relevant algorithm, providing businesses with an optimized marketing solution. Besides that, Alibaab can offer financial services to borrowers within its ecosystem. Purchase record can be used as reference to profile borrowers so as to assess their credibility and the ability to repay.
Unlike data from e-commerce platforms, financial data from Ant Financial are more reliable since Ant Financial can not only stimulate consuming behavior on e-commerce platforms and increase user retention rate, but also provide abundant source of data for big data and improve its algorithm. Ant Financial does not isolate itself from Alibaba, but rather rely on its ecosystem to operate its business.
The engine behind the ecosystem
Whether it’s the recent rumor about a financing of USD 20 billion, or the first round financing of RMB 12 billion last year, we can see that investors care for the company’s value the most. The value we are talking about here can be shown in two aspects. One is that restricted by the financing system, most Chinese people and small and medium-sized enterprises don’t have access to financial services, but as Internet finance develops further such rigid demand has been gradually unleashed. The surging P2P industry is the perfect indicator of this change.
Different from other Internet finance companies, Ant Financial is one of the three pillars of Alibaba and penetrates its financial services into life scenes. Whether it’s loan source such as Ant Huabei, WeBank, or money source like Alipay and Ant Fortune, they are all tools through which Ant Financial is able to amass users at a low cost and in great efficiency. On the other hand, Ant Financial can use its big data technology and business implementation to reduce drastically its risk control cost.
In this case, we are not surprised to find that Ant Financial, an emerging company founded in October 2014, can attain a valuation of USD 50 billion today after reviewing its business logic and Alibaba’s current ecosystem. After all, an enterprise’s prospect is determined by the scale of its audience and the demand. Additionally, the enterprise’s operation model and advantage also matter.
[The article is published and edited with authorization from the author @Kejixinzhi(hard1024), please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.