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Alibaba Eyes U.K. Fintech Space to Boost Global Presence

Zacks Equity Research

Alibaba Group Holding Limited’s BABA affiliate, Ant Financial, is leaving no stone unturned to bolster presence in the global digital payment sector.

The company is making aggressive efforts to buy London-based currency exchange startup, WorldFirst. The startup provides currency-hedging services to facilitate online overseas money transfer‎.

Reportedly, Ant Financial is in talking terms to acquire the startup at about $632.5 million.

U.K. Fintech Space Holds Promise

Post the acquisition, Alibaba will be able to foray into the booming fintech market in the U.K. that holds significant growth opportunities.

Per the latest report from Statista, this particular market is riding on well-performing digital payments segment. The total transaction in the market is projected to reach $149.9 billion in 2018.

Further, the report suggests that the total transaction value is expected to reach $219.4 billion at a CAGR of 7.9% between 2018 and 2023.

We believe that Alibaba is well poised to benefit from the market on the back of Ant Financial’s strategic investments and robust services portfolio.

Alibaba Group Holding Limited Price and Consensus

 

Alibaba Group Holding Limited Price and Consensus | Alibaba Group Holding Limited Quote

 

Growing Global Presence

Expanding global footprint of Ant Financial is a key catalyst for business growth. Apart from U.K.’s fintech market, the company has successfully forayed into other international markets on the back of strategic acquisitions and partnerships.

Early this year, the company announced the acquisition of 20% stake in bKash, a Bangladesh-based mobile financial services provider. Further, its partnership with Pakistan-based Telenor Group to acquire 45% stake in Telenor Microfinance Bank led to the expansion of Alipay in Pakistan.

Further, Alibaba extended partnership with First Data FDC for the deployment of Alipay at the latter’s point-of-sale in North America. Also, the company’s tie-up with Paytm has enabled it to penetrate the Indian online payment space.

Additionally, Ant Financial’s increasing global investments are major positives. Investments in Thailand, Korea, Indonesia, Hong Kong, Malaysia, the Philippines, Pakistan, Bangladesh and India bode well for the company’s global expansion initiatives.

Zacks Rank & Stocks to Consider

Currently, Alibaba carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the retail-wholesale sector are TripAdvisor TRIP and Stamps.com STMP. While TripAdvisor sports a Zacks Rank #1 (Strong Buy), Stamps.com carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for TripAdvisor and Stamps.com is pegged at 14.05% and 15%, respectively.

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