Warburg Pincus in talks to invest in Ant's $8 billion funding round: sources

By Julie Zhu and Kane Wu

HONG KONG (Reuters) - Warburg Pincus LLC [WP.UL] is in talks to invest in a fundraising round for China's Ant Financial Services Group [ANTFIN.UL] expected to be worth at least $8 billion, people with knowledge of the matter said.

The New York-based private equity firm is one of several global and Chinese investors that the operator of China's top online payment platform Alipay is talking to, they said, adding that Ant's valuation may be as high as $150 billion after the round.

Strong demand from investors looking to position themselves ahead of Ant's highly anticipated stock market flotation could result in funding of $8 billion to $10 billion, much higher than an initial target of up to $5 billion, one of the people said.

Warburg Pincus is the second big global name to be associated with the latest equity fundraising after Singapore state investor Temasek Holdings [TEM.UL], underscoring investor appreciation for the company's rapid growth. Previous rounds were limited to domestic investors.

Both Warburg and Temasek are keen to be key investors. Temasek is likely to the lead investor, three sources have said. A separate source said it was unclear whether Warburg Pincus will end up leading the round along with Temasek.

All sources declined to be identified as the talks were confidential.

Ant, controlled by Alibaba Group Holding Ltd founder Jack Ma, declined to comment on the fundraising and its talks with potential investors. Alibaba declined to comment.

Warburg Pincus did not respond to Reuters requests for comment. It has invested in a number of Chinese technology firms such as bike-sharing firm Mobike and electric vehicle maker NIO.

Four-year-old Ant, spun off from Alibaba when the group went public in New York in 2014, is also in talks with several of its existing shareholders including CDB Capital Corp for the pre-IPO fundraising, two of the people said.

CDB Capital could not be immediately reached for comment.

A pre-IPO round is an increasingly common move by sought-after Chinese companies to establish valuations and widen their investor base ahead of going public. Ant has not yet disclosed a timetable or chosen a location for an IPO.

It was not immediately clear what the money specifically will be used for. Ant is, however, eager to expand globally amid greater competition domestically from rival Tencent's <0700.HK> payment business and this could involve more investments or acquisitions, people close to the company have previously said.

The online payments giant has diversified over the years into credit services, asset management and online banking. It has also invested in a number of internet-based startups including Chinese bike-sharing company Ofo, food delivery app operator Ele.me and Indian payment company PayTm.

Ant this week said CEO Eric Jing would become its new executive chairman in addition to his current role, replacing Lucy Peng who had led the financial firm for eight years. Peng has taken the helm as CEO of Lazada Group, the biggest e-commerce retailer in Southeast Asia, which is majority owned by Alibaba.

Barclays in a April 2 research report increased the company's valuation to $155 billion from $106 billion, noting Ant's "faster-than-expected" growth in users and average revenue per user. It predicts that Ant's net operating profit minus adjusted taxes will reach $5.5 billion in 2019, up from an estimate of $3.5 billion this year.

Ant posted about 13.19 billion yuan ($2.1 billion) in pre-tax profit last year, according to Reuters calculations based on Alibaba's earnings reports.

(Reporting by Julie Zhu and Kane Wu; Editing by Sumeet Chatterjee and Edwina Gibbs)

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