Analysis of Alibaba's earnings report shows the company's financial affiliate Ant Financial posted ~$1.4B in pretax profit in the year ended March, up 65% YoY
- Jack Ma's Ant is said to seek private funding of $10 billion — Ant Financial posted full year profit of 9.18 billion yuan
Context & Ripple Effects
This earnings disclosure lands mid-fundraising: Ant Financial had already closed the world's largest private round for an Internet company at $4.5B and a ~$60B valuation in April 2016, and was reportedly shopping a $10B follow-on when Bloomberg surfaced the 65% profit growth. Weeks later the round closed at that size, with the valuation repriced to $150B — the profit print is the justification for that 2.5x markup.
The longer arc matters too: the same profitability trajectory carried Ant to its dual Hong Kong-Shanghai IPO filing in August 2020 with $3.2B in H1 profit, before the government crackdown dented results and the eventual 193% YoY rebound in mid-2024. This 2018 report is the earliest clean datapoint showing Alipay's economics could stand alone from Alibaba.
First-order effects
- Investors in the pending $10B round get hard pretax-profit evidence — 9.18 billion yuan, up 65% YoY — to underwrite a valuation far above the ~$60B set by the 2016 round.
- Alibaba's minority stake in Ant becomes materially more valuable on paper, foreshadowing the one-time gain that later tripled Alibaba's net income in its November 2019 quarter.
Second-order effects
- The disclosed growth gives Ant leverage to close the raise at $10B and reset its valuation to $150B, making it the most valuable privately held fintech and raising the bar for rival payment platforms' own fundraising math.
- A $150B private mark compresses the upside available to future public-market investors, sharpening expectations for an eventual IPO rather than another private round.
Third-order effects
- If payments-and-credit affiliates keep compounding off e-commerce traffic, China's internet giants will keep spinning out financial arms as separately valued entities — a structure regulators would eventually target, as the post-IPO crackdown and Ant's multi-year profit decline show.
- Private rounds priced off audited affiliate earnings become the template for pre-IPO mega-valuations, with each disclosure doubling as a marketing document for the next raise.
The trend: E-commerce giants are spinning out payments affiliates as independently valued mega-cap candidates, with each earnings disclosure feeding the next private round on the road to a public listing.