Ant Financial, the financial technology arm of Chinese online retail giant Alibaba, is stepping up its venture capital ambitions through the building of a $1 billion investment fund. The fund will aim to acquire equity stakes in the most promising fintech start-ups across south-east Asia.
Ant Financial vice-president Ji Gang offered some details on the fund, which is still reportedly at an early stage, while speaking at a conference for young entrepreneurs held this week in Beijing. He shared with the audience that the fund’s focus would be on offering fintech start-ups later stage funding.
Ant Financial is certainly not new to start-up investment and has taken stakes in around 160 young companies over the past five years. It’s an approach which has become common among China’s biggest technology companies. Tencent, which along the Alibaba is the second of the two dominant Chinese internet groups owns equity stakes in around 700 companies. Alibaba’s total is closer to 350. But both seem to be adopting a strategy of defending their position and fuelling future growth by investing in as many promising young technology companies as possible.
As well as offering growth opportunities if they do well, owning part of almost all of the most promising tech start-ups makes it less likely that they will be in future toppled by new companies coming through. Shawn Yang, managing director of Blue Lotus Capital Advisors commented for the Financial Times:
“Alibaba has always looked to use investment in its ecosystem to increase traffic and create synergies with its investees, so this is probably what Ant is doing as well.”
Ant Financial has now reached a value of around $150 billion as a stand-alone company and is still run by Alibaba founder Jack Ma, despite him having recently stepped down as CEO of Alibaba itself. Investors expect an Ant IPO in the relatively near future. Ant has invested alongside its parent Alibaba in several leading Chinese tech start-ups.
Ant Financial is Alibaba’s payments provider and has recently made several international acquisitions with a view to greater international reach. Singapore’s helloPay, the UK’s currency exchange group WorldFirst and Indian payments company Paytm have all recently been snapped up. Last year a deal for US-owned MoneyGram was blocked by the U.S. government, who cited national security risks.
One of Ant’s main targets is to grow the amount of payments made online in markets where they are still limited. Much of south east Asia still falls into that category and offers the potential for huge market growth. There has also been a dearth of investment capital for start-ups from the region over recent times, being referred to as a ‘capital winter’. Ant Financial’s new fund should go at least some way to helping address that.