Fintech Megadeal: Alibaba Unit to Invest $200 Million in Korea’s Kakao Pay
China’s Ant Financial, the financial investment arm of Alibaba Group and the world’s most valuable Fintech company, will invest $200 million in the mobile payment subsidiary of Kakao Corp, a major South Korean messaging platform.
In a significant deal that further underlines the efforts of Chinese internet giant Alibaba Group to expand its global footprint, affiliate Ant Financial’s investment will directly lead to the launch of Kakao Pay, Kakao Corp’s soon-to-launch mobile payments and finance platform in South Korea.
Ant Financial announced the investment to be a part of a ‘larger strategic partnership agreement’ which will see Kakao Pay gain access to Ant Financial’s tremendously popular Alipay platform, allowing subscribers of both platforms to use each other’s services. Fundamentally, the move is to bridge Ant’s 450 million global users with Kakao Pay, which has over 14 million members in South Korea.
In statements, Douglas Feagin, President of Ant Financial International said:
South Korea is an important market for Ant Financial in its global expansion, and we see many opportunities in the market for innovation services and growth in mobile payments.
Further, the new partnership will benefit some 7.5 annual Chinese tourists visiting South Korea. Alipay users will be able to use their payments app with Kakao’s network of 34,000 South Korean merchants, both online and offline. Kakao’s payment platform, like Ant’s, charges merchants a fee on transactions. For money transfers, Ant’s platform charges users a fee for transfers above a specified amount.
Having acquired US remittance firm MoneyGram International last month in an $880 million deal, Ant Financial has also made notable investments in Indian Fintech and mobile payment platform PayTM, which had 122 million users and counting as of early 2016 and; Thai Fintech firm, Ascend Money. In China, Alipay has over 400 million registered users with an average of 175 million transactions per day. More pertinently, Alipay controls nearly 70% of China’s mobile payment market.
According to a Reuters source, Ant is looking to raise up to $3 billion in debt to fund acquisitions in foreign markets.
“Ant’s ultimate goal is to become a global payments monster – the biggest, broadest option for consumers,” said Shanghai-based Ben Cavender, speaking to Reuters from China Market Research. “The challenge is facing strong local players around the world, so it’s cheaper to buy into these companies rather than burning money to steal market share from them.”
In its latest funding round, Ant is valued at $60 billion and is expected to announce an initial public offering this year. As things stand, Alipay is supported at nearly 100,000 retail stores across 70 overseas markets, outside China, in countries including France and Germany.
“The combination of Ant Financial’s global payment platform Alipay and numerous financial and commerce service networks and Kakao’s platform capabilities will result in more effective and convenient financial solutions for both businesses and consumers,” stated Young-Joon Ryu, Kakao Pay’s CEO-elect.
Image from Ant Financial.
