Alibaba confirms government investment for its Alipay and online banking business

Alibaba revealed this afternoon that its finance subsidiary, Ant Financial – which runs Alipay, China’s top online payments service – has received an investment from China’s state-run National Social Security Fund (NSSF). The funding amount is not disclosed.

“Ant Financial announces today that the National Social Security Fund has taken a strategic stake in the company. We hope the strategic investment by the NSSF will enable Ant Financial to portion our growth and success with the public,” said Miranda Shek, Ant’s international communications chief, in a statement issued to Tech in Asia.

Alibaba issued the statement after details of the deal partially leaked and was picked up by Bloomberg. The rumor states that the funding values Ant Financial at more than US$40 billion.

(UPDATE on July 2: Ant Financial today issued a lengthier announcement describing the NSSF backing as series A funding. No figure is disclosed. In other news, Ant Financial says it now has 400 million annual active users, of whom 80 percent are active on mobile. Over 200 million users have purchased wealth management products on Yu’e Bao.)

Shaking up the banks

Ant Financial and the whole Alipay business was not part of Alibaba’s record-breaking IPO last year. Alibaba founder and chairman Jack Ma controversially spun-off Alipay into the Ant Financial subsidiary in 2011 to prevent the ecommerce titan’s sizable foreign ownership stakes – Softbank and Yahoo – being a barrier to operating in China’s finance sector, which has strict foreign ownership restrictions.

See: Watch Alibaba’s Jack Ma demonstrate face recognition-enabled payments

As well as doing Paypal-style online payments, Alipay has other features such as a money market fund for consumers. It’s up against similar app-connected personal wealth funds from rival tech companies such as Tencent, Baidu, and Netease.

Alibaba’s online bank, MyBank, is due to launch later this month.

Ant Financial may go public in the near future.

Earlier today, Ma was in Tokyo to reveal a surprising joint venture with Softbank and Foxconn that focuses on robotics.

Jack Ma (right) pictured today in Tokyo.