Alibaba unit eyes $3.5bn in huge China IPO

The finance affiliate of Chinese e-commerce group Alibaba is understood to be planning a $3.5bn flotation on Shanghai’s main exchange in what could be China’s highest IPO valuation since 2010.

Zhejiang Ant Small & Micro Financial Services Group (Ant Financial) has been profitable for three years, enabling it to meet the listing requirements, and may begin the process as soon as this year, according to sources.

The owner of Alipay, China’s most popular payments system, prefers a dual listing with Hong Kong if it gets regulatory approval.

Ant Financial, which is controlled by Alibaba founder Jack Ma, dominates payments on China’s biggest e-commerce platforms through Alipay and also manages Yu’E Bao, the nation’s largest money- market fund.

The company is currently targeting a private round of fundraising for at least $3.5bn (€3.2bn), more than double the amount originally planned, at a valuation of about $60bn, the sources said.

Alipay, one of the more recognisable names in online finance and consumer payments, would be the largest web player by far on mainland bourses.

“China doesn’t have an Internet company of this scale and influence, so it could enjoy a significant premium in value if it lists in the country,” said Li Muzhi, a Hong Kong-based analyst at Arete Research Services.

“A lot of the potential retail investors are also Ant Financial’s users.”

China’s stock listing rules require companies to be profitable for at least three years and accumulate a profit of more than 30 million yuan (€4.1m).

The entities also need to generate accumulated cash flow of at least 50 million yuan, or post a total of 300 million yuan for revenue in the latest three years, according to the regulations.