Alibaba finance affiliate valued at $45 billion after latest funding

Chinas Ant Financial Services Group, Alibaba Group Holding Ltds finance arm, has completed a private fundraising that values the company at about $45 billion, according to people familiar with the matter.

Alibabas affiliate, which runs Chinas biggest online payment business, sold stakes to external investors, including China Development Bank Capital Co, an investment arm of China Development Bank, and a holding company affiliated with David Yu, co-founder of Jack Mas private equity fund Yunfeng Capital.

Ant Financial also revealed on its official microblog account that China’s National Social Security Fund has become a strategic investor, without providing detail on the investment. The pension fund acquired about 5%, said Wang Zhongmin, a vice chairman of the fund, reflecting the faith in Ant Financials future success.

The financial arms valuation places it among the worlds most valuable private technology companies, next to smartphone maker Xiaomi and US ride hailing service Uber. The company operates Alipay, a service similar to PayPal which has more than 800 million registered users and, according to parent Alibaba, handled $778 billion in the year through June 2014, three times the amount handled by PayPal.

Alipay is the transaction backbone of Alibabas e-commerce empire, allowing shoppers and merchants to easily conduct transactions in Chinas otherwise outdated payment processing environment. In 2011, Mr. Ma spun off the finance operations out of Alibaba into a new company under his control, justifying the move with compliance to new Chinese regulations on online finance.

This sparked Chinas most controversial corporate governance scandal, facing protests by Yahoo! Inc and SoftBank Corp, which held a majority of Alibaba at the time. The Chinese e-commerce group later settled with both.

Ant Financial is also among a few internet companies with permission to open an internet bank, the launch of which is scheduled for next week. Beijing gave Ant Financial the green light to run an internet bank and wealth management products, among others, in order to modernize Chinas conservative and finance sector, dominated by traditional state-owned banks, where smaller businesses and individuals have a more difficult access to borrowed money.

Alibaba Group Holdings Ltd settled 0.06% lower at $86.75 per share on Thursday in New York, marking a year-to-date drop of 16.54% and valuing the company at $216.6 billion. According to CNN Money, the 41 analysts offering 12-month price forecasts for Alibaba Group Holding Ltd have a median target of $107.00, with a high estimate of $137.00 and a low estimate of $72.00. The median estimate represents a +23.34% increase from the last price of $86.75.