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Jack Ma’s Ant Group IPO set to fuel biggest investor frenzy since DotCom bubble

Jack Ma s Ant Group IPO set to fuel biggest investor frenzy since DotCom bubble

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TL;DR

Jack Ma’s Ant Group IPO is all set to become the biggest IPO event ever. The valuation of Alibaba Group’s offshoot is $225 billion and the IPO will go live in both Shanghai and Hong Kong at the same time.

Founded in 2011 and located in Hangzhou, Ant Group offers various solutions aimed at the Chinese payments realm. The Ant Group IPO has a trump card called Alipay app that leads the local transactions realm. Furthermore, the firm also manages massive consumer lending operations through Huabei and Jiebei subsidiaries.

Alipay: The towering $17 trillion mountain

Built as an Alibaba escrow solution, Alipay can aptly be called the Ant Group’s gold mine. The biggest virtual payments application globally manages secure transactions. It is also used by countless other Alibaba-like eCommerce platforms that have sprung up since. Earlier, it acquired a 75 percent share in the payments market but it shrunk to 55 percent after the WeChat Pay launch.

Alipay boasts of an impressive 711 million users. Close to $17 trillion worth of payments were processed by Alipay in the past year. However, Ant Group now has many more lucrative operations which means that the share of Alipay in group’s overall annual revenue has slipped from 50 percent to 36 percent.

Huabei and Jiebei: Dominating the Chinese loan market

When it comes to the minor unsecured lneding market in China, Huabei and Jiebei have no competition. Huabei provides finance for small payments such as mobile devices and appliances. Jiebei offers to lend for specific purposes like education and property.

Ant Group acts as a gateway for banks to offer lending solutions to clients. More than 500 million clients have taken loans from the platform. It is expected that lending operations of both the groups might swell beyond 2 trillion Yuan mark come next year. It now plans to secure a consumer finance license to further expand lending operations, especially in the micro-loan sector.

Yu’ebao: Ultimate money market fund

In the year 2013, Ant Group gave its customers the ability to generate interest on their money kept in the Alipay app. Yu’ebao, a money market fund, was conceived specifically to manage this operation.

Currently, it owns assets worth $173 billion in its kitty that are sure to add browny points to Ant Group IPO. In 2018, third parties were invited to join the group taking the fund options to around 20 asset managers.

Will Ant Group IPO be successful?

China is at crossroads with the world on various fronts be it militarily, economically, or culturally. The coronavirus pandemic has worsened China’s image as a future world leader. Investments in the country are drying up fast. Opaque laws and Communist control are not attracting large companies to their fold. It remains to be seen how the Ant Group IPO is perceived by the investors especially in Hong Kong with its international investor base.

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Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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