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More Chinese money for Indian startups: Alibaba’s Ant Financial plans new fund to invest in these areas

Ant Financial, which has backed large Indian startups such as Paytm and Zomato, would be focusing on startups in payments and online finance verticals.

Ant Financial, the fintech arm of China’s Alibaba having backed large Indian startups such as Zomato, Paytm etc, is eyeing to raise around $1 billion for a new fund to further invest in growing markets including India and Southeast Asia, DealStreetAsia reported. The development comes amid China’s overall economic slowdown and also in investment activity. The Chinese startup ecosystem for the past few years was the apple of investors’ eyes that put millions of dollars and caught the world’s attention with the frantic deal-making activity. However, the environment started cooling down in almost last 12 months with funding level dropping from around $45 billion in Q2 2018 to around $6 billion in Q2 2019, according to KPMG Venture Pulse Q2 2019 report.

The fintech giant, Ant Financial would be targeting startups in the payments and online finance verticals, Bloomberg quoted a source adding that Ji Gang, Ant Financial’s Vice President, informed the audience at a Beijing conference on Tuesday that the company was eyeing a fundraise. However, the amount or the potential targets weren’t disclosed, according to conference organizers’ blog post. Indian fintech companies saw $674 million invested during Q3 2019 vis-a-vis $661 million in Chinese fintech businesses, according to CB Insights Fintech report. In terms of deal volume, China came back strongly in Q3 2019 after a dull Q2 2019 even as it was quite dominant throughout the past 12 months. India’s number of fintech deals in Q2 2019 stood at 23  while China’s was at 21. This was increased to 55 in Q3 2019 while India’s deal volume went up only to 33.

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“While economic growth overall in China and Hong Kong remains robust, these trends suggest that US/China trade tensions are having some impact on market confidence,” Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong region, KPMG China said in the KPMG report. This can possibly help startups in India that might want to leverage China’s slowdown even as the Modi government 2.0 has helped VC sentiments to stay steady. “They (VC community) know that the economic policies and programs created and administered by the ruling party before the election are likely to continue through to the next election in five or so years’ time,” said Nitish Poddar Partner and National Leader, Private Equity KPMG in India.

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