Alibaba continues to grow as it strengthens its financial reach in regards to the insurance industry. Alibaba Group Holding Ltd. plans to invest 1.2 billion yuan or $188 million into a Chinese unit of Cathay Financial Holding Co. According to an official statement released on Monday Zhejiang Ant Small & Micro Financial Services Group Co. is buying a 60% stake in Cathay Insurance Co. The two companies plan on working together in order to grow and increase cooperation with regards to cloud computing.
This new investment will allow Ant Financial to gain a license to develop insurance products and enter into the business a lot quicker. If they didn’t gain this investment it would be a lot slow as they would need to apply for their own license and jump through more hoops. Ant Financial has clearly set their sights high and made it public knowledge that they plan on become an industry leader in the online financial services realm.
Wang Weidong, an analyst at iResearch, a Beijing internet consulting company, recently was interviewed about Ant Financial and said, “Ant Financial is probably trying to explore the many opportunities that big data and insurance provide. Ant Financial is taking a much more hands on approach, instead of just being a platform for insurance products.”
Over 200 million users of Ant Financial’s Alipay payment system currently manage their financials through products like Yu’E Bao, which is a strong money-market fund that pooled in about 613.4 billion yuan by June 30 of this year. Lee Chang-ken, Cathay Financial’s President said, “We look forward to working together in other markets beyond mainland China and Taiwan. Allowing Ant Financial to invest will enable us to have a deeper understanding about Internet finance.”
I will be interested to see how this new deal grows and how the investment plays out for each party. I’ll be sure to keep up-to-date on new developments and an open ear to changes.