China's Ant Financial has raised the stakes on its global expansion, according to KPMG’s Ian Pollari, with the ambitious online payments provider coming home hard in its latest offer to secure US money transfer giant MoneyGram.
The Alibaba-owned financial services group hoisted its already substantial offer for the electronic payment firm MoneyGram International this week, leaving its European rival Euronet Worldwide in its wake and simultaneously securing unanimous approval for its bid from MoneyGram’s board.
According to a joint statement from both companies, Ant Financial raised its bid to $AU1.58 billion and is now offering $18 per share in cash, up from its original January bid of $13.25. MoneyGram shares closed up over 7 per cent on Monday.
The move reflects the beginning of a strategic global expansion as Chinese fintechs seek further international scale.
“Ant Financial is an example of one of a few dominant fintech or e-commerce companies in China now seeking to expand into international markets,” KPMG partner, head of banking & co-lead of global fintech, Ian Pollari told AB+F.
“We can expect to see many more of these announcements.”
The deal, should it go ahead, would give Ant Financial a US presence and, despite multiple foreign acquisitions, MoneyGram represents a first foray into expanding Ant’s cross-border payments strategy overseas.
“Beyond their efforts to acquire MoneyGram in the US, since 2015, we have seen Ant Financial make a number of investments and acquisitions in multiple markets, including India (Paytm), Thailand (Ascend Money), Philippines (Mynt) and South Korea (Kakao Pay)."
According to Pollari, Ant Financial is on a war footing, both regionally and on many fronts.
“There are reports over the past 48 hours of a deal in Indonesia with Emtek Group to deliver a mobile payment service using BlackBerry Messenger. This is a substantial level of activity, with no doubt more to come," he said.
Valued conservatively at $US60 billion, Alibaba’s founder Jack Ma has said Ant will deploy an initial public offering in the near term.
Doug Feagin, president of Ant Financial International, said in the statement Ant would utilize MoneyGram’s broad reach into global remittances, complimenting Ant’s already significant distribution network.
“(The company) will add valuable cross-border remittance capabilities to the Ant Financial ecosystem, serving our more than 630 million users globally," Feagin said.
According to Pollari, with the US the biggest source country for remittances, Ant’s “primary focus” remains cross-border payments and the global remittance web.
“Hence Ant Financial’s interest in Moneygram," he explained. “Their primary focus is on the international remittance and cross-border payments market, seeking to target migrant workers who need to wire home money to their families."
Globally, migrant workers are sending more than $US600 billion to their families in their home countries each year, according to the World Bank.
Following political complications between China and the new US administration over trade imbalances, accusations of currency manipulation and uncertainty across a host of geopolitical issues, the deal must still vault public and regulatory hurdles including a review by the Committee on Foreign Investment (CFIUS), the US inter-agency body tasked with scrutinizing foreign acquisitions for national security risks.
According to Pollari, within three years China’s fintechs have gone from only one company in KPMG’s global top 50 “established” fintech companies to dominating last year with four of the top five.