Market Insight

Alibaba’s Ant Financial to acquire MoneyGram for $880 million

January 30, 2017

Ruomeng Wang Ruomeng Wang Research & Analysis Manager, Security - Fintech & Blockchain

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Alibaba’s affiliate Ant Financial will acquire US-based MoneyGram – the money transfer and payment services company – in a deal worth around $880 million. 

Our analysis:

The acquisition allows Ant Financial (and Alibaba) to increase its global footprint

Ant Financial’s global expansion started with its investments in India and Thailand. Aliababa invested $550 million in India-based e-commerce company One97 Communications (owner of Paytm) and Ant Financial invested $680 million in Paytm in 2015. The transaction made Ant Financial the major shareholder in Paytm, and provided access to Paytm’s 180 million users (by the end of 2016) in India. Ant Financial also made an investment in Thailand's Ascend Money in November 2016 to expand into the Southeast Asian market.

The acquisition of MoneyGram follows Ant Financial’s expansion of Alipay in Europe and the US. The deal gives Ant Financial much greater global scale with MoneyGram’s distribution network of 350,000 outlets in nearly 200 countries. This will be Ant Financial’s second acquisition in the US, having acquired the US-based biometric authentication technology provider EyeVerify in a $70m deal to develop eye verification for its mobile payments service.

Ant Financial will step up to the real international level

Alipay secured its dominant position in the Chinese mobile payments market by customising its service to penetrate into Chinese users’ daily lives for more than a decade, thanks to its strong partnerships with domestic banks and retailers. Ant Financial is facing increasing competition in its domestic market as Tencent-owned messaging platform WeChat is driving mobile payments usage among its 846 million strong user-base. International expansion can help mitigate this threat. Alipay’s international expansion has so far focused, outside its Paytm investment, on enabling Chinese customers to use its service when travelling. It hasn’t yet launched a true international service. The acquisition of MoneyGram will complement Alipay’s financial services. If Ant Financial integrates Moneygram’s services into Alipay, adding international P2P transfer service will not only attract more Chinese users, but also turn Alipay an international money transfer platform for users outside China. This would give Alipay more possibilities compete with other international P2P services such as Western Union and PayPal.

Geography
China Europe India USA
Organization
Alibaba
Research by Market
Mobile & Telecom
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