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BUSINESS & TECH

Ant Financial Creeps Toward $3.5 Billion Loan in Pursuit of MoneyGram

By Qu Yunxu and Yang Ge
Ant Financial Services Group is near a deal for a $3.5 billion syndicated bank loan as it continues to pursue a purchase of MoneyGram International Inc. Photo: IC
Ant Financial Services Group is near a deal for a $3.5 billion syndicated bank loan as it continues to pursue a purchase of MoneyGram International Inc. Photo: IC

(Beijing) — Ant Financial Services Group, parent of the popular Alipay electronic payments service, is near a deal for a $3.5 billion syndicated bank loan, a company source told Caixin, as the financial firm chases its biggest-ever offshore purchase in pursuit of global expansion.

The deal would come just a month after Ant Financial’s last major funding, which saw it raise $4.5 billion in late April. The company has said it wants to eventually make an IPO, but has never given a timetable. The source told Caixin there is still no timetable as Ant Financial gets close to closing the massive bank loan.

Analysts and observers said the new loan is almost certainly linked to Ant Financial’s pending deal to buy MoneyGram International Inc., a U.S.-based money-transfer specialist with a strong global presence. The loan is likely to replace temporary funds that are being used to drive the $1.2 billion purchase, said Brock Silvers, managing director at investment adviser Kaiyuan Capital.

Ant Financial initially agreed to pay $880 million for MoneyGram in a friendly deal announced in January. But rival bidder Euronet Worldwide Inc. made a higher offer and sought to convince investors that Ant Financial’s deal could get vetoed by Washington due to political sensitivities. Ant Financial later raised its offer to the current $1.2 billion figure about a month ago.

A successful purchase would mark a major advance for Ant Financial onto the global stage. To date it has extended its core Alipay service into a number of Asian and Western markets, but most of its overseas users are Chinese traveling abroad.

“The new financing displays Ant’s confidence in the MoneyGram deal despite a growing sense of political trepidation in Washington,” Silvers said. “It also enables an immediate offer of a cash deal to MoneyGram shareholders, which may help to soothe any objections. And by not trying to finance its acquisition with an equity sale, Ant can continue its preparations for a larger and presumably more lucrative IPO once the merger has closed.”

Ant Financial has been at the forefront of a new generation of financial technology, or fintech, firms emerging from China’s private sector over the last decade, as China opens its financial services market to private investment. That group has been raising billions of dollars in cash, mostly from private investors, with a new wave of companies getting set for offshore IPOs later this year, mostly in the U.S.

Ant Financial has been the most aggressive money-raiser, with its latest $4.5 billion funding-round marking a record for an internet company. Ant Financial has made no indication it is in any rush to make an IPO, though previous reports have indicated such a listing would probably come in Hong Kong, the Chinese mainland, or both locations concurrently.

Contact reporter Yang Ge (geyang@caixin.com)

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