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Ant Financial's US$14b haul epitomises private capital excess

Hong Kong

ANT Financial's US$14 billion haul epitomises private capital excess. The eye-popping funding by the Chinese fintech group, unveiled on Friday, cements a US$150 billion valuation. It has raised nearly as much as Facebook and General Motors did in their initial public offerings, even with tech valuations cooling and regulatory risks looming for Jack Ma's firm.

This so-called Series C funding round - which typically generates less than US$50 million - is one of the largest sums ever raised by a single company in one go. International investors from Singaporean fund Temasek to private equity firm Carlyle chipped in at least US$10 billion of the total. The dollar-denominated tranche alone smashes record-setting capital infusions last year into IndiaFirst Life Insurance and Chinese ride-hailing giant Didi Chuxing.

Ant's latest cheque even dwarfs most global tech offerings.

The 75 IPOs so far this year have pulled in a combined US$17 billion, according to Thomson Reuters data. The Hangzhou-based company's windfall also arrives amid shifting investor sentiment in China's listed tech darlings. Shares of gaming giant Tencent have dipped this year. Bets against stocks in the region also are growing, according to S3 Analytics, with the tech industry a favoured target.

There is exuberance in China - another US$4 billion was kicked in mostly by mainland investors that had previously invested in Ant - but it may not be completely shared by Beijing.

Authorities are keeping a closer eye on systemic risk. The company's heft in online payments and wealth management already has attracted scrutiny: Alibaba-affiliated Ant was recently targeted by the central bank for a trial programme to test strict rules on financial holding conglomerates, Reuters reported last week.

That clearly was not enough to scare off the extraordinary pools of private money sloshing around these days. Over US$750 billion was raised last year, nearly twice as much as in 2011, according to research outfit Preqin. These sorts of investors - from venture capitalists to sovereign wealth funds - increasingly have been backing entrepreneurial firms later in their development, lifting valuations ahead of inevitable IPOs.

That means when the time comes for the likes of Ant to go public, prospective new buyers will have to keep their antennae up. REUTERS

  • The author is a Reuters Breakingviews columnist.The opinions expressed are her own.


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