Ant Group could be headed for the largest initial public offering in history, as the Chinese financial-technology juggernaut chases a valuation that would rival the biggest payments companies in the world.
See: Exclusive: China’s Ant aims for $200 billion price tag in private share sales – sources
The Alibaba Group Holding Ltd.–affiliated company controlled by Jack Ma has filed paperwork to list its shares concurrently on the Hong Kong and Shanghai exchanges. Ant, which runs China’s immensely popular Alipay mobile wallet, is reportedly looking to rake in at least $35 billion through an offering that could value the company at $250 billion, according to Bloomberg.
That would make Ant’s offering larger than that of Saudi Aramco, which brought in more than $25 billion in the biggest IPO to date. A valuation of $250 billion would mean Ant is worth more than Bank of America Corp. BAC ($207 billion) and PayPal Holdings Inc. ($213 billion) but less than JPMorgan Chase & Co. ($287 billion), Mastercard Inc. ($336 billion) and Visa Inc. ($427 billion).
The company is best known for its mobile-payments offering, but it aims to be a one-stop financial hub that also provides access to wealth management, investing and insurance services. Analysts view the payments portion of the business as a gateway that brings users in to Ant’s more complex offerings.
Here are five things to know about Ant as it prepares for a public debut.
A sprawling financial empire
Unlike Western mobile wallets, Ant’s platform touches on nearly all aspects of one’s financial life. Ant goes beyond what PayPal and Apple Inc.’s. Apple Pay do, offering services for everything from payments to credit to insurance to investments within Alipay, which the company calls a “ubiquitous super app.” Ant counts more than a billion annual active users for the Alipay app and 711 million monthly active users.
See: Global News Radio Interview with Michelle Beyo: Alipay – Moving Money Between Countries
The Alipay app is “synonymous with digital payments in China,” Ant said in its filing. Bernstein analyst Kevin Kwek sees the payments component as a “hook product” for the company that may have limited profit potential but helps the company bring in new users who can then try out more lucrative services.
Tightly linked
Alibaba previously had a profit-sharing arrangement with Ant in which Alibaba received 37.5% of the company’s pretax profits, but Alibaba announced in early 2018 that it would be switching to an equity structure. Now, Alibaba has a 33% stake in Ant through its subsidiaries, a move that analysts thought would help the Chinese e-commerce giant benefit from a potential Ant IPO down the line.
Money machine
Ant generated RMB 120.6 billion ($17.7 billion) in revenue over the course of 2019, up from RMB 85.7 billion a year earlier. The company’s latest annual total consisted of RMB 51.9 billion in digital-payments revenue and RMB 41.9 billion in credit-technology revenue. Ant added RMB 8.9 billion in revenue from insurance technology and RMB 17 billion from investment technology.
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