China’s Ant Group To Acquire Stake In Singapore Payments Firm 2C2P

April 20, 2022
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After its aborted IPO in 2020, Ant Group is quietly building out its overseas business on a lighter budget, with its majority stake acquisition of a regional merchant payments platform.

After its aborted IPO in 2020, Ant Group is on the expansion trail again with a majority stake acquisition of a regional merchant payments platform.

Chinese fintech giant Ant Group has announced a new strategic partnership with 2C2P, a Singapore-based payments firm with a strong presence in Asian markets such as Thailand and Malaysia.

As part of plans to help accelerate digital payments adoption in the region, Ant Group will also acquire a majority stake in 2C2P.

In a press statement, 2C2P said the partnership will help expand the reach of both companies, connecting them to more than 1bn consumers globally.

2C2P’s existing merchant base will be connected to Alipay+, which will mean that 2C2P’s existing 250 payment options will be expanded to support more e-wallet and local payment services.

Aung Kyaw Moe, founder and CEO of 2C2P, said that digital payments and e-wallet use have accelerated rapidly since the pandemic, a trend that both companies hope to capitalise on.

Angel Zhao, president of Ant Group’s International Business Group, said the partnership will benefit from the two companies’ “deep local knowledge” of markets across Asia.

“This partnership is a win-win collaboration built on strengths and the shared vision to accelerate the digital transformation for businesses through innovation and best-in-class payments solutions,” said Zhao.

Previously, in November 2021, Ant Group announced a partnership to integrate Alipay+ with the Network for Electronic Transfers (NETS), one of Singapore’s largest payment service providers.

Under the agreement, NETS merchants can accept payments in Singapore currency from local e-wallets supported by Alipay+ and e-wallet holders will be able to pay using their home wallet currency.

NETS said in a statement that the partnership will enable merchants to serve global customers more efficiently, provide consumers with access to a wider merchant base and accelerate adoption of quick response (QR) code payments in Singapore.

Ant Group’s development of cross-border acceptance comes at a time of increased focus on interoperability in the region, with various bilateral cross-border QR code payment linkages announced between countries such as Singapore, Malaysia, Indonesia, Thailand and Vietnam.

Alipay+ ⁠— Ant Group’s international arm
Introduced in 2020, Alipay+ is a suite of global cross-border digital payments and marketing solutions designed to enable businesses, especially small and medium-sized enterprises (SMEs), to process a wide range of mobile payment methods and reach regional and global consumers.

Both the 2C2P acquisition and the NETS partnership align with Ant Group’s increased focus on international expansion to support growth.

As the owner and operator of Alipay, Ant Group is already in control of China’s largest digital payments platform, but it is looking to markets overseas as areas of relatively untapped opportunity.

In 2017, Ant Group Chairman and CEO Eric Jing said the company is aiming to reach 2bn users in a decade, primarily through overseas expansion.

An Ant Group insider told the FT in 2020 that this strategy had begun with getting overseas merchants to accept Alipay.

Although this was mainly aimed at serving Chinese travellers and the diaspora, in 2019 this helped Ant Group grow its international payments volumes to RMB622bn ($98 bn).

Once Chinese tourism was established as a strong user base for Alipay abroad, Ant Group then turned to strategic investments and partnerships to further expand its overseas presence.

As of 2020, Ant Group held minority stakes in ten e-wallets ventures in South and Southeast Asia, including Paytm in India, Easypaisa in Pakistan, Ascend Money in Thailand, KakaoPay in South Korea and Touch ‘n Go in Malaysia.

Ant Group’s market positioning has also been complemented by acquisitions by its parent, Alibaba, such as the 2016 acquisition of Lazada, one of the largest e-commerce platforms in Southeast Asia.

This gave Ant Group the opportunity to encourage e-commerce customers to use Alipay at the checkout, and in the years since Jing’s 2bn proclamation, the users have started to appear.

In Alibaba Group’s Fiscal Year 2020 Annual Report, the e-commerce giant revealed that in the past 12 months, the number of annual active users (AAUs) serviced by Ant Group was approximately 1.3bn, while its 2020 IPO filing boasted of over 80m active merchants on the Alipay.

However, Ant Group’s business is still overwhelmingly dominated by mainland China, which in 2019 accounted for over 95 percent of its RMB120bn revenue and value of payments.

Ant Group back on the acquisitions offensive

The acquisition of 2C2P could be an important sign of the Ant Group’s expansive intentions following a tricky few years, including the well-documented aborted IPO in October 2020.

The company’s international expansion plans were dealt a significant blow by its failure to list.

In its IPO filing, Ant Group wrote that 40 percent of the funds raised by the IPO would go towards expanding “cross-border payment and merchant services initiatives” and “developing more digital services for consumers, merchants and partners beyond China”.

Expected to raise $34.5bn, the IPO would have been the largest in history, fetching the company a valuation of $313bn.

But on the eve of the IPO the move was blocked, allegedly due to a personal intervention by Chinese President Xi Xingping.

According to Chinese officials quoted by the Wall Street Journal, President Xi’s decision was a form of payback for the public statements of Jack Ma, Ant Group’s largest individual shareholder, who had criticised Chinese banks and regulators for what he saw as limiting fintech innovation.

One week before the IPO, Ma had accused China’s state-owned banks of operating with a “pawn shop” mentality, for only providing loans to borrowers who could post collateral.

In response, state regulators started compiling reports on how Ant Group had used digital financial products such as Huabei, a virtual credit card service, to encourage poor and young people to build up debt, according to officials quoted by Reuters.

Following the ditched IPO, Ma was nnot seen in public for over three months, leading to suspicions that he was either under house arrest or had been detained by the Chinese Communist Party (CCP).

In any case, the message to Ant Group was clear: cross China’s regulators at your peril, keep your innovation within bounds, and in the meantime, perhaps stay out of trouble in the Middle Kingdom for a while.

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