Alibaba invests $200m in South Korea’s Kakao

Alibaba’s payment affiliate Ant Financial is investing $200m in South Korean messaging service Kakao, as part of the Chinese tech giant’s move to build out online payment systems around the world.

The two companies said the investment is part of a wider strategic partnership to link Ant Financial’s 450 million users worldwide with Kakao’s payment division, Kakao Pay, which has more than 14 million users. The partnership will also enable Kakao Pay to expand from online payments into online banking and financial services.

“South Korea is an important market for Ant Financial in its global expansion, and we see many opportunities in the market for innovative services and growth in mobile payments,” said Ant Financial International president Douglas Feagin.

Kakao’s mobile messaging service, Kakao Talk, is South Korea’s leading messaging service with more than 48 million users worldwide. The company spun off Kakao Pay into a separate fintech unit in January this year.

Alibaba recently acquired US-based online payments company MoneyGram for around $880m and has also invested in Singapore’s M-Daq, Bangkok-based Ascend Money and the Philippines’ Mynt, owned by Globe Telecom.

Alibaba’s global expansion also includes a 40% stake in India’s Paytm, which has added more than 20 million new users since the Indian government introduced its controversial demonetisation programme in November 2016.

Ant Financial’s China-based payments solution, Alipay, accounts for around 80% of online transactions in China, which flow through Alibaba’s ecommerce portals and third-party mobile applications. The fintech giant, which is gearing up for a $10bn plus IPO later this year, is also involved in investment services and online banking.