26 Aug 2020

Will Ant Financial Group’s listing be the largest IPO in history?

Will Ant Financial Group’s listing be the largest IPO in history?

It’s official. After years of speculation over the future direction of Ant Financial Group, a Chinese fintech conglomerate controlled by billionaire Jack Ma, has finally filed for IPO, with plans to sell at least 10 per cent of its shares in a dual offering in Hong Kong and Shanghai. Experts estimate that the IPO will raise around $30 billion, eclipsing the $29.4bn raised in an IPO by Saudi Aramco last year. Two people with direct knowledge of the situation said Ant would meet investors in the coming days to determine the exact pricing and size of the offering.

Ant Financial Group, the parent company of Alipay, China’s largest digital payments platform, disclosed its detailed financial data for the first time in its IPO document, finally affording investors a glimpse of the size and scale of its business. The company disclosed that it earned CNY 18 billion ($2.6 billion) in net profit last year on revenue of CNY 120.6 billion. Additionally, its growth is accelerating despite the pandemic, a testament to its dominance. In the first half of 2020 alone, the Ant Financial Group reported a profit of CNY 21.9 billion on total revenues of CNY 72.5 billion.

The company has not yet disclosed details about the pricing of its shares. But several analysts predicted that its market valuation could be north of $200 billion, making it larger than some of America’s biggest banks. This is hardly surprising since Ant Group runs the wildly popular Alipay mobile payments app in China which, according to the company’s filing, has over 1 billion annual active users and processed CNY 118 trillion in transactions in mainland China in the 12 months ended June 30. The platform also has an international presence, with annual transaction volume of 622 billion in markets outside China. 

Over the years, the company has also expanded its financial products beyond that, including wealth management, loans to businesses and insurance. More recently, Ant has pivoted to focus on what it calls technology services — financial technology products that it can sell to enterprise customers for a fee.

In 2011, Jack Ma transferred Alipay — as Ant was then called — out of Alibaba into an entity that he controlled, triggering a dispute with Yahoo and SoftBank, two of Alibaba’s largest shareholders at the time. Jack Ma explained then that it was to comply with Chinese regulations prohibiting foreign ownership of financial businesses.

Today, Jack Ma has voting control over the company through two partnerships that hold a 50.5 per cent stake of Ant. The company said it would put 40 per cent of capital raised in the IPO towards research and development, 30 per cent to expand its user base and product offerings and 10 per cent into building its international business.

The exact date for the IPO has not been confirmed yet, but investors are already excited by what could be the largest IPO in history.