I estimate that revenue from Tencent's fintech business grew in excess of 70 per cent last year.Yet Tencent also offers other products such as wealth management and has a 30 per cent stake in WeBank, China's first online-only bank, which was founded five years ago. Data on its fintech profits are hard to ascertain, yet information disclosed by Alibaba shows that Ant Financial was unprofitable last year, so Tencent could be in a similar boat.
He estimates that a maturing market will ease cut-throat competition and enable both companies to take a greater share of the money that goes through their payments platforms. Throw in the other products, and Bernstein calculates a base-case valuation for Tencent's fintech unit of US$160 billion, going as high as US$230 billion. This indicates that 40-58 per cent of Tencent's current market cap is locked up in this hitherto hidden division. Bernstein has a base case of US$210 billion for Ant, reaching as high as $320 billion.
A more recent example comes from India, where Walmart Inc is reported to be spinning off payments business PhonePe from local e-commerce company Flipkart Group, which it acquired last year. That transaction could turn a US$20.8 billion startup into two unicorns with a combined value of more than US$30 billion.