Ant Financial targets logistics finance with Keking bet

By investing in Chinese logistics services provider Keking, Ant Financial is complimenting Alibaba's growing logistics push further upstream.

Keking has raised Rmb1 billion ($144 million) via a Series C round of funding led by Ant Financial and Centurium Capital, opening a new front in Alibaba's growing push into Chinese logistics.

On its WeChat account, the cloud-based Chinese logistic services provider said on Monday that it planned to cooperate with Alibaba affiliate Ant Financial to provide logistics companies and lorry drivers with data and fintech services. 

The new money raised, which includes contributions from existing investors Sequoia Capital and Tebon Securities, will be used to build a Keking public account on Alipay and provide fintech products in cooperation with Ant Financial’s online bank Mybank.

Specifically, Keking and Ant Financial will together collect freight payments and provide truck loans to small-and-medium-sized enterprises. 

Keking offers one-stop service platforms for logistics companies, providing management services, payment systems and finance. The startup offers customised financing services using data to profile small logistics companies and drivers.

US venture capital firm Sequoia, a long-time investor in the logistics industry, was a Series A investor in Keking in 2015 when it injected $14.5 million into the company. Sequoia and Tebon Securities, AVIC Trust, China Fellow Partners invested a further $29 million in Keking in 2016 during its Series B fundraising.

Alibaba has previously said that it will invest more than Rmb100 billion in the next four to five years to build a smart network of logistics, warehouses and terminal centres to help speed up delivery throughout China. Ant Financial, meanwhile, is targeting the associated fee-collection business.

In 2017, the total cost of logistics in China was Rmb12.1 trillion - or about 15% of that year's nominal GDP.

Current rivals in the Chinese logistics finance space include JD Logistics and smaller firms like SF Financial, the financial arm of the courier SF Express. 

But there is also some consolidation going on due to the government crackdown on internet finance, which has led to the closing down of 1,000 peer-to-peer lending platforms.

“Beijing has tightened the regulations on internet finance [and this has] kind of hit the logistics finance as well,” according to an ex-employee of SF Finance. “Smaller players such as SF Finance all shrank their finance business to cooperate with the regulatory change, but the need is still there.”

UPSTREAM, DOWNSTREAM

Ant Financial's investment in Keking appears to complement Alibaba’s $1.38 billion June investment in delivery company ZTO Express. The consortium that bought the 10% stake in this courier includes Alibaba’s own majority-owned logistics affiliate Cainiao Smart Logistics.

Between the two of them, it would seem, Alibaba and Ant Finacial are hoping to earn money from both upstream and downstream logistics since via Keking’s platform they will now also be able to catch up with other players in the field of logistics finance.

Through its investment in Keking, Ant Financial is seeking access to the 10,000 logistics companies and lorry drivers that the platform serves. 

Freight transactions on Keking’s platform total $10 billion a year. And in the last three years the Keking platform has forwarded $2.9 billion of loans to companies and drivers.

Keking said it will further develop its cloud service platform to build data and payment standards, in line with Ant Financial’s broader logistics strategy.

¬ Haymarket Media Limited. All rights reserved.

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