Alibaba affiliate Ant Financial is making yet another M&A deal. The firm is investing $200 million into a fintech project belonging to Kakao, the $5 billion firm that runs Korea’s dominant messaging service.
Ant Financial, which manages payments service Alipay and Alibaba’s digital banking business, will invest the capital into Kakao Pay, a soon-to-launch Kakao fintech division. The deal will see Ant Financial begin to offer its financial services through Kakao Pay in Korea, and help expand its business from online payments into offline, banking and financing services.
Kakao Talk has 48 million users — it is installed on over 95 percent of smartphones in Korea — and it has long offered mobile payments through its platform. Last month, the company’s board made the decision to split its financial services into a new company which, beyond housing Kakao Pay — which allows over-counter payments, peer-to-peer transactions, bill payment, web banking and more — will move to offer financial services such as loans and financing.
These are all areas where Ant Financial is already well entrenched and experienced in China, so the alliance makes plenty of strategic sense for both parties. Beyond helping Kakao accelerate, parent company Alibaba also has plenty to gain. This alliance could open the door for Alibaba to push its e-commerce services more aggressively in Korea, and also make it easier for visitors from China to use Alipay.
Ant Financial is in the process of closing a $3 billion debt funding round which it said would be used to make investments and acquisitions, and there have been plenty of those already. The firm is buying U.S.-based MoneyGram for $880 million, and has made recent investments in Ascend Money (Thailand), Mynt (Philippines) while it also holds equity in Paytm (India) and M-Daq (Singapore). All of these deals, like Kakao Pay, are hugely strategic — and we can expect to see more soon.