Alibaba's Ant Financial Expands Into Hedge Fund Industry

Chinese e-commerce juggernaut Alibaba Group Holding Limited’s (NYSE:BABA) affiliate Ant Financial has reportedly invested in Shanghai Suntime Information Technology Co., a financial data provider.

Though there hasn’t been any official announcement, media reports indicate that the deal is worth about $35 million and covers a 20% stake in Shanghai Suntime.

If the news is true, Ant Financial is now the second largest shareholder in Shanghai Suntime, after the data provider’s Chairman Liao Bing.

Alibaba’s Plans

The new move could add a wide gamut of financial products to Alibaba’s portfolio, helping it to fetch more revenues. It will also push the company to expand beyond e-commerce.

Alibaba has been aggressively expanding into media and data businesses. Through Ant Financial, the company controls Yu’E Bao, China’s largest money market fund. Last year, the company started a joint venture with Shanghai Media Group Inc. and also acquired Hong Kong-based South China Morning Post. The company is also said to be considering investments in Chinese business magazine publisher, Caixin Media Co.

Merger Synergies

The acquisition could help Alibaba to steer its business into the rapidly growing hedge fund industry in China. Per reports from the Asset Management Association of China, the number of private security funds was up by a huge 140% annually, as of May 31, 2016.

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About the Duo

Ant Financial, Alibaba’s finance arm, offers diverse services including online payment, insurance and wealth management products. Its core Alipay online payment service is China’s largest of its kind and has about 450 million users. The company is rumored to be going public in 2017.

Shanghai Suntime, on the other hand, tracks hedge funds in China and offers wealth management and profit forecast services.

At present, Alibaba is a Zacks Rank #5 (Strong Sell) stock. Some better-ranked stocks in the wider technology sector include CommVault Systems, Inc. (NASDAQ:CVLT) , Netgear Inc. (NASDAQ:NTGR) and Radcom Ltd. (NASDAQ:RDCM) , each sporting a Zacks Rank #1 (Strong Buy).