ALIBABA Group Holding Ltd.’s financial services affiliate is planning a domestic initial public offering (IPO), Shanghai Securities News reported Friday.

    Zhejiang Ant Small & Micro Financial Services Group (Ant Financial), which runs online payment platform Alipay, is seeking to raise up to US$4 billion in a private placement of shares and is looking at a domestic IPO in 2017, the newspaper said.

    Alipay, China’s most widely used online payment platform, is seen as a crucial part of Alibaba’s business, which ranges from e-commerce to entertainment.

    Ant Financial is currently valued at between US$35 billion and US$40 billion, the paper said. It added that the firm had selected China International Capital Corp. (CICC) as its financial advisor, citing documents from private equity firm CDH Investments.

    Around 10 percent of the company will be sold to strategic investors in the private placement, its first round of funding, with candidates limited to firms backed by the Chinese Government, the newspaper said.

    News magazine Caixin said earlier that China’s social security fund, Postal Savings Bank of China, and CDB Capital, an investment arm of China Development Bank, would be in discussions for stakes of 5 percent, 3 percent and 3 percent respectively.

    Ant Financial is controlled by Alibaba’s executive chairman Jack Ma and other senior Alibaba executives, after the company spun off Alipay in 2011 from the rest of the firm.

    Ma has said repeatedly he plans to eventually list Ant Financial. He said last month that there was no timetable yet for the IPO and it was not determined where the listing would happen, although he has been looking at Asia as a location.

    Alipay plays a critical role for Alibaba by processing most of its e-commerce transactions.

    Alipay’s role as a payments network within China makes it a sensitive asset and Alibaba management’s decision to pursue a domestic route for introducing strategic investors and an IPO is in line with indications from China’s central bank that the asset shouldn’t be controlled by foreign investors. (SD-Agencies)