Funding global expansion
JD.com’s (JD) financial services subsidiary, JD Finance, is raising nearly $2.0 billion at a valuation of ~$20.0 billion in a funding round. This funding round is expected to be completed by the end of September. JD Finance’s fundraising comes shortly after its rival Ant Financial did the same. Ant Financial, an affiliate of Alibaba (BABA) and the name behind the Alipay service, raised $14.0 billion in June at a valuation of more than $151.0 billion.
JD Finance is looking to fund its global expansion and invest more in innovation so it could better capitalize on the booming online finance trend. Ant Financial has global ambitions, but its attempt to acquire MoneyGram (MGI) to supercharge its global push hit a snag after the US government blocked its deal with the global money remittance firm.
Alipay rules China’s mobile payments market
JD Finance was spun off from JD.com last year. JD Finance has partnered with more than 700 financial institutions and has served more than 8.0 million small businesses and 400.0 million consumers. Its services include asset management, lending, and payment processing.
Alibaba’s Alipay is China’s top mobile payment service, followed by Tencent’s (TCEHY) WeChat Pay, according to Analysys International.
Baidu (BIDU), China’s leading online search engine company and one of the country’s online finance providers, also intends to spin off its financial services unit the way JD.com has done.
China’s regulatory restrictions
JD.com, the parent of JD Finance, is listed on the NASDAQ. China has restrictions on foreign investments in key sectors such as finance. The decision to separate JD Finance into a standalone company was seen as a way to make it easier for the unit to obtain licenses that would allow it to broaden its financial operations in China.