Ant Group - A Guide to China's Largest Fintech Company

Late on October 29, 2020, the Chinese fintech firm Ant Group told The Wall Street Journal that mainland China’s investors had already ordered more than $2.8 trillion USD worth of shares in the company’s initial public offering. Simultaneously listed in Shanghai and Hong Kong, the IPO will likely be worth closer to $34.4 billion USD, or $39.5 billion USD if underwriters in both locations utilize their option to increase the offering by 15%.

Over five million investors ordered shares in Shanghai alone, a record for the STAR Market’s IPO subscriptions. Like Nasdaq but with a technology focus, the STAR Market has been around for about a year. STAR Market IPO investors require brokerage-account assets of 500,000 yuan ($74,300 USD) or more and two years of trading experience to participate. Somewhat balancing these strict requirements is that Ant Group’s IPO’s minimum purchase is only 50 shares. That’s about $516 USD. Furthermore, institutional investors have also been getting in on the deal, according to the article.

Alibaba, founded by Jack Ma, partly owns Ant Group. Ma said that his IPO was the largest ever priced outside of New York, as cited by the BBC. According to an earlier article in The Wall Street Journal, the IPO went through the processes unusually quickly, starting with its summer application and continuing to its anticipated trading date of November 5, 2020. To further expedite the process in Hong Kong, instead of beginning with a price range, which is a typical scenario, Ant Group fixed the price before accepting orders. By contrast, the usual timeline for Shenzhen and Shanghai IPOs is one to two years.

The Power of Jack Ma and Alipay

“Many people look up to Ma as an example of "the ultimate Chinese dream," explained Edith Yeung, general partner with Race Capital, as quoted by CNN. Ma overcame some significant obstacles, she said. For instance, short in stature, Ma was a child of China's Cultural Revolution who lacked both family connections and an Ivy League degree. Additionally, two years after Ma founded Alibaba, the dotcom bubble burst. Today, he’s China’s wealthiest man, according to the Bloomberg Billionaires Index. Alibaba was Ma’s first record-breaking IPO, and Ant Group is shaping up to be his second.

Indeed, Ma has been instrumental in some key technology trends. Ant Group’s platform, Alipay, has over 1.3 billion annual users who utilize it to place about $17.6 trillion USD worth of transactions, as cited by the BBC. Established in 2004, when many Chinese people needed a safer way to make online purchases, Alipay is the main online payment system used in China. Insurance, peer-to-peer transfer, money market investment, lending, and wealth management services are also available through Ant Group, as reported by the BBC and CNN. Additionally, the company serves other Asian countries as well.

When considering Ant Group’s present and future, it’s important to note that many Chinese tech companies have been caught up in the unfriendly relations between the U.S. and China. For instance, because the Trump Administration has made certain economic threats, including threatening to restrict Chinese firms’ access to U.S. capital markets, many tech firms like Ant Group have opted to use domestic stock markets instead, according to the BBC. The company also faces hurdles at home, as regulators at the Shanghai Stock Exchange blocked the IPO on Tuesday, November 3rd, 2020, two days before the IPO was set to launch.

At VerifyInvestor.com, we serve issuers of private placement offerings which may have international investors. Domestic and foreign investors must meet specific requirements like income or net worth tests, especially if they participate in Rule 506(c) offerings, which requires investors to be accredited investors. Fortunately, when verifying foreign investors, we don’t need U.S. financial documentation. Instead, we will gather the information we need directly from your investors, including proof of income or net worth using documentation from their home countries. All reviews are confidential and thorough.