China's Ant ups fundraising target, valuation could hit $150 billion: sources

By Julie Zhu and Anshuman Daga

(Reuters) - China's Ant Financial Services Group is in talks with investors to raise at least $8 billion in its next planned round of funding, potentially valuing the company at about $150 billion ahead of an expected stock market floatation, people with knowledge of the plan said.

Singapore state investor Temasek Holdings is likely to be the lead investor in the latest round of equity raising by the company, controlled by Alibaba Group Holding Ltd founder Jack Ma, three people said.

Reuters reported in February that Ant, owner of China's top online payment platform Alipay, was planning to raise up to $5 billion, which could value the online payments giant at more than $100 billion.

The fundraising plan comes ahead of an expected stock market flotation, though Ant has neither set a timetable for the initial public offering (IPO) nor has it chosen any location for the same.

One of the people said Ant could end up raising between $8 billion and $10 billion, as a result of strong investor demand.

All the people spoke to Reuters on the condition that they not be named as the fundraising details are confidential. Ant and Temasek declined to comment. Alibaba did not immediately respond to Reuters request for comment.

A pre-IPO round is an increasingly common move by sought-after Chinese companies to establish valuations and widen their investor base ahead of going public.

A $150 billion valuation would make Ant one of the biggest public flotations ever, dwarfing this year's launch of Spotify and Dropbox and comparing to the $104 billion float of Facebook six years ago or Alibaba's own $168 billion valuation in 2014.

Shares in e-commerce giant Alibaba rose about 3 percent in premarket trading.

Alibaba said in February it was taking a 33 percent stake in Ant, replacing the previous system where it received 37.5 percent of Ant's pre-tax profit, in what was viewed as an important step ahead of any IPO.

"Part of the increase in valuation might be because the new investors have received extra features," said Jay Ritter, an IPO expert and professor at the University of Florida.

"But part of the increase is because the company is continuing to live up to expectations, and is becoming an even more important player in China's mobile payment space."

DUAL LISTING?

The Wall Street Journal reported earlier on Tuesday that Ant was now planning to raise $9 billion in its planned round of funding, potentially valuing the company at $150 billion.

The WSJ said the owner of Alipay was expected to list on both domestic and overseas exchanges, in line with previous speculation that it would list in both Hong Kong and New York.

Appetite among U.S. investors has been strong this year for tech sector debuts by Dropbox, Spotify and Zscaler, easing concerns raised by the fall in Snap Inc's shares last year.

Alibaba set up Alipay in 2004, modelling the business on PayPal, to help Chinese buyers shop online, and in 2011 controversially spun it off and rebranded the payment processor into Ant Financial three years later.

After becoming a dominant payments company in China, Ant Financial focused on international markets by buying a stake in Indian payment firm Paytm and Thai financial technology firm Ascend Money.

Its attempt to buy U.S. money transfer company MoneyGram International was, however, blocked at the start of this year by U.S. officials on national security grounds, a blow to Ma who had promised President Donald Trump that he would create 1 million U.S. jobs.

Current shareholders in Ant include large state-owned institutions such as China Life Insurance, China Post Group - parent of Postal Savings Bank of China - and a unit of China Development Bank.

(Additional reporting by Sumeet Chatterjee in Hong Kong and Parikshit Mishra in Bengaluru; Editing by Patrick Graham)