China's Ant Financial Services Group, e-commerce giant Alibaba Group Holding Ltd's (NYSE: BABA) internet finance affiliate, closed a private placement valuing the unit at about $45 billion U.S., according to sources Thursday.
Ant Financial sold stakes to external investors, including China Development Bank Capital Co and a holding company affiliated with David Yu, the co-founder of Alibaba Executive Chairman Jack Ma's private equity firm Yunfeng Capital, the person said, adding that they did not know how much was raised.
China's National Social Security Fund acquired about 5 percent, the person said. On its official Weibo microblog, Ant Financial confirmed the fund had invested, reflecting the faith in Ant Financial's future growth and profit.
David Yu had previously bought shares in Ant Financial, but with his holding firm's stake increase he and other external investors now hold 12.4% of the company, according to the person.
Part of the reason Ant Financial is so valuable is that it operates Alipay, the crown jewel in Alibaba's e-commerce empire, which allows shoppers and merchants to make online transactions easily in China's otherwise unmodernized payment processing environment.
Beijing has also given Ant Financial the green light to run an internet bank and wealth management products, among other things. The motive is to shake up China's stodgy and conservative finance sector, where traditional state-owned banks have underserved smaller business and individual borrowers.
State-run Shanghai Securities News had reported in February that Ant Financial was seeking to raise up to $4 billion U.S. in private placement of shares.
Alibaba's American Depositary Shares gained 58 cents, or 0.7%, early Thursday to $87.38 U.S., within a 52-week trading range of $77.77 to $120.00 U.S.
