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The Ant Group’s IPO scheduled for next week breaks all records. But where there is euphoria, there are also risks.
The Ant Group – in the image the reception at the headquarters of the Chinese city of Hangzhou – tries to position itself as a technology company and not as a bank.
There is no shortage of superlatives in this IPO. With the share’s issue price for the Hong Kong and Shanghai listings fixed, Ant Group is likely to raise a total of around $ 34.5 billion when it goes public on November 5. It would be the world’s largest initial public offering (IPO) to date. Petrochemical company Saudi Aramco received $ 29.4 billion when it went public in December. If Ant Group realizes all the allocation options, it would be larger than US bank JP Morgan Chase, based on market capitalization. In terms of assets, Ant, valued at around $ 320 billion, would also be larger than the Industrial and Commercial Bank of China, currently the world’s largest financial group.
Alipay has 731 million active users
But what is Grupo Hormiga anyway? Ant grew as the financial subsidiary of the technology and e-commerce group Alibaba. The payment app Alipay had 731 million active users as of September 30. The asset management division traded investment products with a volume of $ 580 billion; 400 million Chinese consumers use consumer credit negotiated by Ant Group. Ant also sells insurance.
In recent years, Jack Ma, the founder of Alibaba and CEO until the fall of last year, has increasingly pushed Ant out of the parent company. Today, Alibaba still has a 30% stake in Ant Group. More recently, the finance arm also changed its name from Ant Financial to Ant Group. Ant, according to the message, sees itself as a technology company, not a bank, and is therefore not regulated by the Chinese financial market authorities.
Ant has tremendous growth potential
In fact, Ant Group is more of a financial services broker than a financial services provider in the true sense of the word. Ant works with partners and uses its applications, similar to many fintechs in Europe, to bring consumers closer to banks and insurers.
The sheer number of users in China, coupled with the amount of data Ant has at his disposal, is fueling investors’ imaginations. Increased revenue in China is opening up huge growth potential for Ant Group, also abroad. The fees Alipay charges retailers are still a fraction of what Western credit card companies charge. It’s no wonder newspapers are oversubscribed many times.
But with its growing size, Ant is increasingly on the radar of authorities, regardless of whether the company is a bank, fintech or technology group. The prospectus explicitly lists the risks that could be threatened by stricter regulation from the antitrust authorities. China’s financial supervisory authorities have long been looking for ways to contain fintechs and control them more strictly. No great stock history is without risk.
