Fintech giant Ant Group goes public: why is it important?
Today we’ll discuss not one of the topics of financial technologies , but the news that has spread through the fintech world and caused public discussion. China Securities Regulatory Commission (CSRC) has approved fintech giant Ant Group’s IPO on a Hong Kong Stock Exchange. Under the current conditions the company’s IPO is expected to be record-breaking and amount to $35 billion in an initial public offering. Ant Group also intends to list on the Shanghai Stock Exchange, but it hasn’t yet received the green light from the China Securities Regulatory Commission.
Ant Group at a glance
The Alipay payment system was established in 2004 when it became necessary to provide users of such large platforms as Taobao and Alibaba with a “pay after receipt” function and ensure the security and availability of payments. But the question arises — what is Ant Group? When the popularity of the payment service Alipay began to grow rapidly due to the large audiences of e-commerce platforms, it was decided to separate it into an affiliate company. So Ant Financial appeared in 2014, and a bit later the name was changed to Ant Group. From a supporting tool for the operation of e-commerce platforms, payment operator Alipay has grown to an international payment platform with a Chinese digital payments market share of 54% — a huge turnover. Alipay is one of Ant Group’s most valuable assets. However, the company can be certainly called today a fintech giant that specializes in completely different areas — from payments to insurance, from investing to lending. In 2019, Ant Group processed $17 trillion of transactions in mainland China and a further $90 billion overseas, according to its Hong Kong preliminary regulatory filings. Well, net profit has exceeded $3 billion as for the H’1 2020.
Ant Group and IPO
Ant Group is currently the leading player in one of the world’s most challenging financial technology markets. With the IPO, the company is trying to enter new markets, begin with more active development outside China and activities diversification. Going public will help attract new partners and customers, because the company transparency will increase. And, of course, the IPO will provide an opportunity to attract additional funds necessary for expansion and achievement of the goals concerning the sphere digitalization in China.
According to analysts, Ant Group’s IPO could value the company in excess of $ 200 billion. Demand for the company’s shares is very high. The Chinese fintech giant could have one of the biggest offerings ever, surpassing the record set by Saudi Arabian oil company and even Alibaba. A significant deterrent on this issue is the confrontation between the Trump administration and China. The hardliners are trying to deter US investors from participating in the IPO, intending to add Ant Group to the US trade blacklist. The Chinese regulator is studying a possible conflict of interest.
The development of Ant Group in new markets will bring modern trends and expertise, increase the level of sphere digitalization on a global scale. This is a good push for the fintech industry in developing countries.