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Ant Group, the biggest Chinese financial-tech player, is set to go the IPO way in October. When it does happen, it will shatter all IPO records, as the Jack Ma-owned juggernaut looks to raise its valuation to a whopping $250 billion by raking in $35 billion. As of now, the record for the biggest IPO in history is held by Saudi Aramco, which managed to bring in over $25 billion.

Some of the companies that Ant would leave behind if it manages to raise the $35 billion it aims to include PayPal Holdings and Bank of America Corp. Here are some things that all investors should know ahead of the groundbreaking Ant Financial IPO.

1. Profit-sharing arrangement with Alibaba

Ant’s profit-sharing arrangement with Alibaba has changed. Previously, Alibaba used to receive 37.5% of Ant’s pre-tax profits. However, since 2018, Alibaba’s switch to an equity structure resulted in a shakeup, and today, Alibaba, through its subsidiaries, has a 33% stake in the company. According to analysts, the move was aimed at Ant Financial’s long-term value creation instead of being subject to a profit share’s quarter-to-quarter fluctuations.

2. Recent revenue statistics

In the fiscal year 2019, Ant’s generated revenues amounted to $17.7 billion, a significant increase from the fiscal year 2018, when it generated $12.62 billion. In the fiscal year 2020, Ant generated:

  • Digital-payments revenue of $7.64 billion
  • Credit-technology revenue of $6.17 billion
  • Insurance technology revenue of $1.31 billion
  • Investment technology revenue of $2.50 billion

3. Investment rules

As tensions between China and the USA are on the rise as a consequence of the trade war, Ant will be listing shares in Shanghai and Hong Kong. Buying them won’t be as straightforward as it would be for USA-based investors to purchase stocks listed on US exchanges. Purchasing them may require investors to adhere to certain rules, which should be checked thoroughly with brokerages.

4. Subject to protectionism

China is one of the leading country for FinTech development and application. While Europe and the USA still open to Ant Group’s Alipay platform, things may change. As global trade conflict are on the rise, country may use “national security” as a tool to limit the development of a technology company. Leaders spanning numerous nations and continents are considering taking the protectionist route when it comes to Chinese companies and their products.

Ant, despite being affiliated to Alibaba, one of the world’s biggest companies, can’t influence geopolitics. It’s the reason why investors are both excited and concern about the Ant Financial IPO.

Investment Disclaimers


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