The scale of Chinese fintech dwarfs other localities. The numbers of users, how much money flows through the pipes, and its penetration within Chinese society are certainly impressive. So, when Ant Group, the payments and digital financial services firm behind Alipay and partly owned by Alibaba, files to go public, it’s fair to expect an fintech extravaganza.
What’s happening: Ant Group has filed an IPO for a dual listing in Shanghai and Hong Kong.
- The IPO is expected to raise $30 billion.
- Ant’s public offering will be the biggest of the year and possibly of all time.
- The fintech firm, which operates Alipay and used to be known as Ant Financial Services Group, is controlled by Alibaba founder Jack Ma.
- It is reported to be seeking a valuation anywhere between $200 billion and $300 billion. For context, that is richer than most global banks and is three to four times the size of Goldman Sachs’ equity value.
- Ant plans to issue 10% in new shares of its total capital, its IPO filing said
Ant is ramping: It’s been a banner year for the Chinese firm, as consumers and businesses continue to route their finances through Ant pipes.
- More than 700 million people a month and 80 million businesses use Ant’s services to pay bills, buy insurance and invest in mutual funds.
- For this year, Ant reported full-year revenues of more than Rmb120 billion ($17 billion) and net profit of nearly $2.5 billion in 2019.
- Profits in the first half of 2020 have exceeded the whole of 2019 at more than Rmb21 billion ($3.1 billion).
- That’s a 38 percent rise in first-half revenue and an eightfold jump in pre-tax profit.
- Together with Tencent, Ant processes some 200 trillion RMB ($28.8 trillion) of payment and transfers annually. That’s more volume than Visa and Mastercard combined.
- Much of Ant’s revenues are derived from servicing Chinese tourists’ spending abroad. Though travel ground to a halt during the pandemic, rising online spending seems to offset the loss.
- Ant generates over a third of its revenue from digital payments and merchant services, while nearly two thirds came from its fast-growing digital-finance technology platform.
Ant’s platform strategy: Ant has quickly opened up its platform to over 2,000 banks, wealth managers and insurance companies to sell to its 1 billion annual active users.
- It also white-labels its products for others to sell to its user base.
- 98 percent of the loans originated through Ant’s platform were underwritten by other financial institutions or securitised as of June 30, according to the public filing.
- Ant has collaborated with Vanguard to target 900 million Chinese with a robo-adviser offering.