What is Ant Group and why will its IPO make history?
HONG KONG — Stella Su, who lives and works in Shanghai, has used an ATMonlyoncein the past year. Instead of cash, in recent years she has done almost all her business using the digital wallet Alipay — shopping in a mall, buying stuff online or transferring money to friends.
“Now when I go out, I don’t even need to carry my wallet, all I need is my phone,” said Su, one of over a billion Alipay users.
Alipay, operated by Ant Group, is the world’s largest and most valuable financial technology or fintech company and one of two dominant Chinese digital wallets in China, the other being rival Tencent’s WeChat Pay.
Thanks to the huge scale and potential of China’s fintech landscape, Ant Group is poised to raise about $34.5 billion in the world’s largest share offering, beating Saudi Aramco’s previous record of $29.4 billion. Ahead of the IPO, the company will be valued at about $280 billion.
To tap both Chinese and global investors, Ant Group is listing its shares both in Shanghai and Hong Kong. It is due to begin trading in Hong Kong on Nov. 5. The Shanghai debut has yet to be announced.
Even before announcing its IPO plans, Ant Group was the world’s most valuable fintech company, with a valuation of $150 billion after a 2018 fundraising round.
“Ant Group is much more than PayPal which only processes financial payments. It has a lot of businesses in other areas and with other services that would help 1.3 billion people in China,” Jackson Wong, asset management director at Amber Hill Capital Ltd., said.
Alipay and WeChat Pay have helped make Chinese society
virtually cashless, at least in big cities, with consumers and merchants alike relying on digital payments using their phones.
“Think of Alipay as Visa, MasterCard, Citibank, Fidelity, all rolled up into one,” said Shaun Rein, founder and managing director of China Market Research Group in Shanghai. “On the Alipay platform, you pay for things, you buy insurance, you
buy wealth management. Your whole life revolves around Alipay.”
Alipay evolved from e-commerce giant Alibaba, which was founded by Jack Ma in 1999 to help match buyers and sellers in China’s fast growing market. When Alibaba launched consumer e-commerce platform Taobao to rival eBay in China, Alipay was introduced as a pay
ments method to boost users’ trust in the platform. Today, Alipay’s reach extends to almost every aspect of life related to money.
Ma’s foresight has made him the wealthiest person in China, with a fortune estimated at $58.8 billion according to the Hurun Research Institute, which follows the country’s wealthy.
Alipay was created in 2004 to
serve as an escrow service between buyers and sellers on Taobao. It held funds from buyers to be released to sellers after goods were received. Alipay’s revenue mostly comes from transaction fees charged to merchants.
Alibaba, which currently owns a third of Ant Group, spun off Alipay in 2011.