Ant Group IPO: Everything you need to know about Ant Group

Canary Wharf London cityscape at night with HSBC building
Rebecca Cattlin
By :  ,  Financial Writer

What do we know about the Ant Group IPO?

Ant Group was expected to file a preliminary IPO prospectus in July 2022, but that has yet to materialise. This came after news broke that China’s financial regulators were discussing allowing the company to revive its IPO plans.

The company had wanted to go public previously but the listing was shelved in 2020 after Beijing cracked down on US-listed Chinese stocks. If the company has been given permission to list now, it could mark the start of these tensions easing. Although given China’s response to Nancy Pelosi’s visit to Taiwan, we could see further standoffs between the two nations.

It’s unlikely we’ll get a formal Ant Group IPO announcement until the confirmation from Chinese regulators is set in stone. But there are three reasons this seems more likely now:

  1. Ant Group is now a financial holding company regulated by the People’s Bank of China – so the government can access the data of users
  2. Ownership of the company will be through a joint venture between three-state owned companies
  3. Alibaba, who own a third of Ant Group, are dual listed in Hong Kong

Jack Ma is also expected to give up control of Ant Group, according to the FT. This could further delay the fintech firm’s listing plans but is likely another way of appeasing Beijing officials, who have had a few unsavoury interactions with the billionaire entrepreneur in the past.

This means that Ant Group’s IPO is at least a year, if not three years away – any group that makes a change to its controlling shareholder has to wait three years to list in the mainland but only a year to list in Hong Kong.

 

How to trade the Ant Group IPO

Once Ant Group has been listed, you’ll be able to trade its shares in the same way as any other stock on the market. Find out about IPO trading with us.

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What does Ant Group do?

Ant Group is a digital financial services company, most known for its mobile payment app Alipay, which has over one billion users. It’s the most popular mobile app outside of the social media sphere.

Ant Group was created in 2004 by Chinese e-commerce giant Alibaba Group as a means of solving the lack of trust between buyers and sellers in the online shopping market in mainland China. In 2011, Alibaba spun off Alipay so that the subsidiary could qualify for a payment business licence in mainland China. It was at this point the name changed from Zhejiang Alibaba E-Commerce Company to Ant Financial – and later Ant Group.

The payment network is now just one branch of Ant Group’s offering, but it acts as a gateway for users, funnelling them into other parts of the company’s ecosystem that has services spanning lending, investment and insurance. Consumers can even access non-financial services through the Alipay app, such as food delivery and even rubbish collection.

It’s estimated that consumers can get a loan from Alibaba in just three minutes, with no human intervention needed.

Most of the services that Ant Group provides are done in partnership with other firms. The loans that Ant Group provides are underwritten by larger financial institutions. It’s estimated the company has about 100 partner banks. The insurance platforms are made through partnerships with more than 90 mainland insurers. And the investment services are created through partnerships with over 170 asset managers and wealth management providers.

 

Ant Group and its regulatory landscape

Ant Group has suffered a number of setbacks when it comes to regulation – as have a lot of Chinese companies, so it’s not necessarily a red flag. In 2017 Ant purchased 51% of a small asset manager, Tianhong, a move that received a lot of complaints to the China Securities and Regulatory Commission (CSRC). In mainland China, taking ownership in asset management firms is highly controlled, but as Ant wasn’t then regulated by the CSRC, the transaction was allowed.

Since then, the CSRC have had a number of run ins with Jack Ma – founder of Ant Group. Especially after he’s rumoured to have made a number of insulting comments about the regulatory body following the suspension of Ant Group’s original IPO plans.

 

How much is Ant Group worth?

Ant Group was valued at $180 billion by Warburg Pincus in March 2022. When the company first announced IPO plans in November 2020, it was estimated to be worth around $315 billion. The listing would’ve raised $34.5 billion, and been a new world record, but the combination of the company’s restructuring, the pandemic and global slowdown have knocked the valuation significantly.

How does Ant Group make money?

Ant Group makes its money through its lending, investment, and insurance products. It’s estimated that the group makes 121 yuan per user, which is just $17.92 or £14.79. That might not be much compared to other financial institutions, but as the app has over 1 billion users, it still managed to make approximately 19.71 billion yuan ($2.9 billion) in profit in 2021.

As of 2020, most of Ant Group’s money, was made through its ‘CreditTech’ business, which provides credit to consumers and small businesses. This segment surpassed the revenue streams of payments.

Mainland China accounts for 95.6% of Ant Group revenue according to statements made in 2020, and most revenue generated outside of that is purely through cross-boarder services.

Ant Group has been expanding internationally, but this relies on forging partnerships with other countries and applying for financing licences. It’s likely the firm could face increased regulatory scrutiny from both the US and Chinese governments’ as it looks to expand into America. In 2020, the US was looking to impose actions against both Tencent and Ant Group over their mobile apps, restricting the sale of its technology.

Is Ant Group profitable?

Yes, Ant Group is profitable. But by how much is anyone’s guess as it’s not a public company and has no filing obligations. According to Alibaba Group Holdings earnings in November 2021, Ant Group contributed nearly $1 billion to revenues. If we go off the fact that Alibaba owns 1/3, that gives us an estimated 19.71 billion yuan ($2.9 billion) in profit for Ant Group.

 

 

Who are Ant Group’s competitors?

Ant Group’s largest competitor is Tencent’s WeChat Pay. Between the two there’s pretty much a duopoly over China’s digital payment market, accounting for over 90% of mobile payments in 2020.

In 2019, Alipay did have a larger transaction size, according to analysis from Morningstar. But beyond that it’s currently not possible to make a one-for-one comparison between the two firms. Ant Group is private and has little public information available, and Tencent’s WeChat Pay does not breakout its revenues separately from the rest of the business.

 

Who owns Ant Group?

Ant Group is currently still owned by billionaire Jack Ma, who holds a controlling share of the company. He owns about 50.52% of the business. But as mentioned previously, Ma is expected to reduce his holding amid regulatory reshuffling of the company.

Ant Group is still one-third owned by Alibaba, which Ma co-founded. Alibaba has a stake of approximately 33% in the businesses as of 2018. The IPO is not expected to dilute Alibaba’s holdings.

 

Ant Group’s board of directors

Ant Group’s board of directors currently consists of:

  • Eric Xiandong JING, Chairman
  • Xingjun NI, Executive Director
  • Joe TSAI, Non-executive Director
  • Li CHENG, Non-executive Director
  • Quan HAO, Independent non-executive Director
  • Yiping HUANG, Independent non-executive Director
  • Xiaolei YANG, Independent non-executive Director
  • Laura May-Lung CHA, Independent non-executive Director

 

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