Financial terms of the transaction are undisclosed.
The investment will see ofo cooperate with Ant Financial in the fields of e-payment, credit system and its international growth and follows an earlier partnership formed with Ant Financial-backed social credit scoring system Sesame Credit, which allows Shanghai-based ofo users with a Sesame Credit score of 650 or higher to register on the app without making the RMB 99 deposit.
This strategic investment by Ant Financial follows an earlier strategic investment from Chinese transport service major Didi Chuxing.
Eric Jing, CEO of Ant Financial, said, “Ant Financial’s vision is to make our world slight better each day. The vision is shared by bike sharing companies like ofo,” said “Ant Financial hopes to make our mobile platform, personal credit score, payment and risk management systems available to help the whole bike sharing industry grow better.”
The most recent investment that ofo raised was a $450 million Series D in February. This was claimed by ofo to be the largest funding round to date among bike sharing services. CEO and founder Dai Wei has disclosed that ofo is valued at $ 2 billion and sees over RMB 10 million ($1.45 million) in daily revenue. The company hopes to be profitable this year.
According to Ant Financial CEO Jing Xiandong, the partnership with ofo will allow it to harness the potential of its mobile platform, which offers services that include credit management, online payment, risk management and safety control.
Meanwhile, ofo’s competitor Mobike has formed a similar partnership with WeChat. Together, AliPay and WeChat dominate China’s online payments space. In Q4 2016, Alipay was reported to hold 55 per cent of the third-party mobile payment service market, while WeChat’s own suite of payment services which includes Wechat Payment and QQ Wallet, has 37 per cent market share. Two years ago, Two years ago, WeChat’s payment services held only 10 per cent of the market while Alipay held 80 per cent of it.
Via the investment, Ant Financial will be able to expand its user base internationally, leveraging on ofo’s ambitions to become a global player. The Beijing-based bike sharing service currently operates in the UK, US and Singapore, with plans to expand to 20 countries by the end of 2017. These include Japan, Spain, France, Germany and the Philippines.
This gels with the strategic focus of Ant Financial to enter and establish a footprint in emerging markets such as India and South America, given that mobile payment penetration in these emerging markets is still low.
The partnership comes at a time when the market for bike-sharing services in China is saturated. In an interaction with Bloomberg, ofo’s co-founder Zhang Siding maintained that despite teh saturation, ofo had the scale to survive any bust in the sector.
He said, “There will be a bubble for the industry. But as long as we continue to do practical things, then there won’t be a bubble.”