Alibaba's Ant Financial to raise as much as $3 billion in debt: source

HONG KONG (Reuters) - China’s most valuable online finance company, Ant Financial, is in early stage talks with banks to raise between $2 billion to $3 billion in debt to fund acquisitions and foreign investments, a person with direct knowledge of the matter told Reuters.

A logo of Ant Financial is displayed at an event of the company in Hong Kong, China November 1, 2016. REUTERS/Bobby Yip

Banks have made “soft pitches” to help Ant raise funds, most likely through loans, to be used by the company for acquisitions such as that of MoneyGram International Inc as well as for boosting existing investments, the person said.

Ant, an affiliate of online shopping giant Alibaba Group, dominates China’s online payment market, but has been ramping up investment overseas amid fierce rivalry at home with peers like Tencent Holdings Ltd’s popular WeChat Pay.

“It is the market practice for a globalized company like Ant Financial to raise debt in U.S. dollars,” a representative of Ant Financial told Reuters, but gave no further details.

Ant, valued at about $60 billion after a $4.5 billion funding round last April, is set for an initial public offering (IPO), though the firm has not specified a timeframe or listing venue.

With 450 million users of its Alipay payment service, Ant is making a concerted push to expand its presence overseas.

Last month, the firm said it would acquire U.S. money-transfer company MoneyGram for about $880 million. It has also invested in Indian mobile payment and e-commerce website Paytm and Thai financial technology firm Ascend Money.

Ant’s move to raise funds via debt, instead of selling equity as most Chinese tech firms have done in the past, is due to favorable interest rates for bank loans, the source with direct knowledge of the matter said, declining to be named as the talks were not yet public.

Technology news website, The Information, earlier reported that Ant was looking to raise more than $3 billion, citing a person familiar with the matter.

Ant is controlled by Alibaba founder Jack Ma.

Last year, in three separate loan deals, Chinese Internet giants Alibaba, Baidu Inc and Tencent raised a combined $10.4 billion, according to Thomson Reuters LPC data.

Tencent also raised $3.5 billion in bank loans in October to fund its acquisition of Supercell, the Finnish maker of hit game ‘Clash of Clans’.

Reporting by Sumeet Chatterjee and Sijia Jiang, additional reporting by Prakash Chakravarti, writing by Adam Jourdan; Editing by Himani Sarkar