Alibaba affiliate Ant Financial announced a surprise deal to acquire international payment service MoneyGram for $880 million last month, but that looks like being just the start of its M&A activities.
A source at the company confirmed to TechCrunch that it is close to raising nearly $3 billion in debt financing in order to bankroll further acquisitions, as The Information and Bloomberg initially reported.
“It is the market practice for a globalized company like Ant Financial to raise debt in USD,” an Ant Financial spokesperson said of the reports.
Ant Financial’s business includes Chinese digital banking service MyBank and Alipay, China’s dominant digital payment service with 450 million users, but it also has stakes in India’s Paytm and Southeast Asia-based Ascend Money. The Moneygram deal, which is scheduled to close before the end of the year, not only gives it a presence in the U.S. market — a region that has eluded Alibaba for some time — but the Moneygram service itself is hugely popular across the world and particularly notable for its offline presence.
In that respect, Moneygram complements Alipay’s vast digital footprint, and it could be a critical piece for Alibaba, since it plans to use payments as a ‘trojan horse’ to further its e-commerce presence globally and offset its current reliance on its core business in Asia. Even though it is performing well — Alibaba lifted its annual guidance in its last quarterly report, which smashed analyst estimates — the firm is aware of the fickle nature of Wall Street and the potential impact that China’s economy could have on its business.
In that spirit, Ant Financial’s new funding raise and a possible M&A spree could further expand its focus into other areas and geographies that strength Alipay and links to Alibaba’s e-commerce empire.
Ant Financial is tipped to go public in the next year or two, potentially in China, eschewing the path taken by Alibaba which held a record U.S. IPO worth $25 billion in 2014. Last year, Ant Financial raised a colossal $4.5 billion venture funding round at a valuation of $60 billion. Its investors included sovereign wealth fund China Investment Corp (CIC), CCB Trust, a subsidiary of China Construction Bank, China Life, China Post Group, China Development Bank Capital and Primavera Capital Group.