Ant Financial Looking to Take the IPO Road of Its Parent Alibaba Group

After an astounding 2014, the news of Ant Financial's initial public offering (IPO) activity should not be a complete surprise for the global e-commerce and finance community.

Furthermore, Jack Ma, whose Alibaba Group Holdings is the parent entity, had mentioned the prospect on several previous occasions. The head of China's e-commerce giant is jointly in control of the financial arm of Alibaba with a group of Alibaba high-level executives, after the online banking company, Alipay, was developed in isolation from the parent four years ago.

According to the state-run Shanghai Securities News publication, Ant Financial's revenue rose by an outstanding 92 percent to reach 10.2 billion yuan last year, equating to a 2.6-billion-yuan net profit sum and a 26-percent margin.

Alipay forms the crux of Ant Financial's earning power, representing over 70 percent of its operating income, while about a third of its revenue comes from a 30-percent stake in MYBank (a private-investment bank that received regulatory approval in September) and relatively minor financial operations, such as small loans and credit management businesses.

The immense value of Alipay, which is presently China's most widely used online payment platform, means that Ant Financial is valued at between $35 billion and $40 billion.

While representatives from Alibaba, Ant Financial, and financial advisor China International Capital Corp. (CICC) remained tight-lipped about the status of the IPO proceedings, a piece in Caixin magazine reported that China's state-backed social security fund, the Postal Savings Bank of China and CDB Capital, are in the process of negotiating stakes of 5 percent, 3 percent and 3 percent, respectively.

According to Shanghai Security News, Ant Financial is seeking to generate an estimated $4-billion private share-placement amount for a 2017 domestic IPO.

Meanwhile, Ma has indicated to the media that he is uncertain about where the IPO will be held.