In September, the hottest market news is Ant Group, backed by Alibaba, will go public to list its shares in Hong Kong and on Shanghai’s Star Market, China’s Nasdaq-like tech board. This will lead to one of the biggest IPO in histroy.
Let’s see what business Ant Group provides and why it may pull off a record breaking IPO.
In “Alibaba, the Operating System for Commerce, Make Business Easy Anywhere“, I have briefly provide one picture that the payment and financial services infrastructure Ant Group has building is one of the necessary foundations that support Alibaba digital economy.
Ant Group is a technology company that provides comprehensive digital payment services and offers digital financial services and digital daily life services for consumers and small and micro businesses, or SMBs, in China and across the world. It collaborates with global partners to bring sustainable, inclusive financial services to unserved and underserved users. Innovation has always been at the core of Ant Group’s fundamental philosophy, as it continuously pursues various new initiatives, including the commercial applications of blockchain. During the twelve months ended March 31, 2020, the number of global AAUs served by Ant Group and its nine local e-wallet partners reached approximately 1.3 billion.
Ant Group business has three growth pillars: Digital Payment & Digital Finance, Globalization, Technology Service.
Digital Payment Services
Ant Group provides digital payment services to facilitate online and offline transactions, supports merchants to stay engaged with their customers and accelerates the digital transformation of merchants’ offline businesses. For the twelve months ended March 31, 2020, Ant Group experienced significant growth in payment transactions, which was predominantly driven by continuous expansion of user and merchant coverage, as well as higher transaction frequency. Ant Group continues to be the leader of the digital payment market, with credit payments becoming increasingly popular among its users.
Digital Financial Services
Ant Group facilitates a broad spectrum of digital financial services including wealth management, micro financing, insurance, and credit service, primarily through partnerships with third-party financial institutions. During the twelve months ended March 31, 2020, the vast majority of Ant Group’s digital payment users were also digital financial services users. As these users stayed longer on the Alipay platform, their assets and liabilities managed through Ant Group continued to grow notably. For the twelve months ended March 31, 2020, digital financial services contributed more than 50% of Ant Group’s overall revenues. Digital financial services in China primarily consist of four categories:
Wealth management. Ant Group partners with financial institutions, such as fund management and insurance companies, to offer comprehensive wealth management products, including money market funds, fixed income products and equity investment products through Ant Fortune, its wealth management platform. As of March 31, 2020, Ant Fortune facilitated RMB4.0 trillion of assets under management for its partners.
Micro Financing. Ant Group partners with banks and other lenders to provide small-amount, flexible-term credit services to consumers and SMBs. Through extensive technology and risk management capabilities, Ant Group enables its partners to deliver greater credit access to the unserved and underserved populations.
Insurance. Ant Group partners with insurance companies to provide a full suite of insurance product offerings, including innovative insurance products to meet users’ unserved insurance needs for e-commerce and other daily life use cases, as well as healthcare and life insurance products jointly developed with insurance company partners. For the twelve months ended March 31, 2020, total insurance premiums facilitated by Ant Group more than doubled compared to the same period in the prior year.
Credit Service. Zhima Credit is a private and independent credit assessment service built for commercial use. Users with a higher Zhima Credit scores can enjoy benefits such as deposit waivers when renting a bike or staying at a hotel. Currently, Zhima Credit has been able to help users waive more than RMB 100 billion of required deposits.
Ant Group seeks to leverage its leading technology capabilities to service global customers and merchants. As of March 31, 2020, Ant Group had entered into strategic partnerships with nine local partners in Bangladesh, Hong Kong S.A.R., India, Indonesia, Korea, Malaysia, Pakistan, the Philippines and Thailand. It further advanced its global network initiatives to facilitate and optimize cross-border transactions, as well as to enable merchants to sell globally and consumers to buy globally. Ant Group’s global network is differentiated in that it is inclusive, fully digitalized, open and a techfin enabler. It continues to expand use cases to better serve its users. For example, foreign credit card holders can now utilize mobile payments in China through the Alipay app. Ant Group also provides one-stop payment solutions in online and offline cross-border use cases. For example, Apple’s iTunes Store now accepts mobile wallet payments from Ant Group’s local partners in Korea, the Philippines and Thailand; and Alipay Hong Kong wallet users are now able to make offline payments in several regions outside of Hong Kong.
Ant Group has pioneered various technology services, including the commercial application of blockchain, AI, Security, IOT, Comptuing. As of March 31, 2020, Ant Group’s proprietary blockchain technology had been applied to a wide range of commercial use cases, such as supply chain financing, product provenance as well as electronic bill issuance and circulations.
Also, Ant Group is committed to building an open ecosystem, joining hands with partners in opening up its business, capabilities, and technologies to provide merchants and consumers with the best services.