2 Winners and 2 Losers from the Ant Group IPO

Ant Group, previously known as Ant Financial, gained approval from Chinese and Hong Kong regulators as it looks to go public sometime this month. The company is expected to raise $35 billion at a valuation of…

$250 billion which would make it the largest public offering in history, surpassing the Saudi Aramco IPO.

In such a short time, Ant Group has become a juggernaut with a dominant position in online banking, digital payments, and e-commerce payment processing, especially in Asia.

This valuation would make Ant Group worth more than nearly every financial or fintech stock currently listed in the United States other than JPMorgan (JPM), Visa (V), or Mastercard (MA). Of course, this is more impressive given that the company is just over a decade old.

Given the recent strength in the IPO market for fast-growing tech stocks and the massive gains in fintech stocks, it wouldn’t be surprising to see its IPO oversubscribed. Already, its parent company, Alibaba (BABA) has said it will be buying 22% of the offering which will increase its stake from 35%.

Since Ant Group is being listed on the Hong Kong and Shanghai exchanges, interested investors can see if their broker offers trading in those markets. Other options are to invest in Alibaba (BABA), who will own a sizable stake in Ant Group, or consider ETFs like the Renaissance International IPO ETF (IPOS), KraneShares China CSI Internet ETF (KWEB), iShares MSCI China ETF (MCHI), and the SPDR S&P China ETF (GXC) which are expected to add shares of Ant Group in the coming months.

Origin Story

Ant Group actually started as a solution to a problem that Alibaba faced in growing its business to business and business to consumer online marketplaces. Growth was hindered by the lack of financial infrastructure. In the early days of the Internet, there was a lack of trust between parties that payment or shipments would be made. Alibaba had to build this itself to foster the growth of its eCommerce system.

From these humble beginnings, it’s become a financial portal for companies and individual’s financial decisions including investing, wealth management, insurance, lending, etc. The payments product is basically a funnel that brings users into eventually using Ant’s more higher-value, higher-margin products and services. This makes Ant an amalgam of an insurer, broker, bank, and fintech company.

Impressive Growth

It’s been spectacularly successful, with nearly 1.3 billion users. During the coronavirus, user growth and revenue per user has increased.

Ant Group’s rise has been phenomenal. It’s not inconceivable that over the next decade, it passes BABA in market value given the size of its platform and monetization opportunities. Many believe the platform will grow to over 2 billion users over the next decade.

Another impressive stat about Ant Group is that…

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