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Summary
- Ant Group was supposed to launch the world's largest-ever IPO in November 2020.
- Affiliated with the Alibaba Group, the fintech company has emerged as the world's leading and profitable financial payment services company.
- The group was hit with a record fine of 18.2 billion yuan by China's anti-monopoly bureau.
Chinese fintech company Ant Group might resume its suspended initial public offering (IPO) this year. Formerly known as Ant Financial and Alipay, Ant Group is an affiliate company of Jack Ma's Alibaba Group (NYSE:BABA).
The financial payment services company was supposed to launch the world's largest-ever IPO in November 2020. However, the Chinese regulatory authorities had intervened before the shares started trading in Hong Kong and Shanghai equity markets.
The public debut of Ant Group is once again under the spotlight after reports claimed that Fred Hu, Director of Ant Group, has said that he is confident that the IPO will happen. Chinese authorities have forced the company to overhaul its business practices, but Mr Hu claims that the fundamentals of the fintech company remain intact.
Ant Group’s financial performance & outlook
After the Chinese regulatory authorities halted the IPO plans, Ant Group reportedly recorded a net income of US$ 3.4 billion in the December quarter. The fintech giant has emerged as the leading and profitable financial payment services company, and it contributed 7.2 billion yuan to the Alibaba Group.
The digital payment services market has witnessed significant growth in recent years. In addition, during the pandemic, e-commerce sales boomed worldwide, giving an extra boost to the digital payment market.
According to a Mordor Intelligence report, the value of digital payment transactions was US$ 5.44 trillion in 2020, and it is expected to more than double in the next six years and reach US$ 11.29 trillion. During this period, the digital payment market will expand at a compound annual growth rate of 11.2 per cent.
As Ant Group is a leading company and diversifies its business through cryptocurrency markets, the company seems to be in the right direction for achieving significant growth.
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Ant Group IPO this year?
Apart from being a provider of digital payment services, Ant Group expanded its business operations over the years and ventured into personal retail lending, insurance, and wealth management. In China, there are stringent regulations around lending, and it is a state subject.
This was why the regulatory authorities summoned Jack Ma and other executives, and despite Mr Ma's efforts to convince them, Ant Group's IPO was suspended. Big tech companies are under the government's radar as they have been accused of monopolistic behaviour and manipulation of customers and merchants.
In April this year, the Alibaba Group was hit with a record fine of 18.2 billion yuan by China's anti-monopoly bureau. The Chinese regulators noted that the tech giant had monopolistic business strategies, which restricted merchants from doing business on rival platforms.
After the record fine, Alibaba Group had accepted it and vowed to change. If the Chinese authorities are convinced that Alibaba is complying with the laws and making amends, there are chances that the Ant Group might be able to list its shares in the Hong Kong and Shanghai stock markets.
