Let’s Talk About the Ant in the Room
Six years ago, Jack Ma made history by raising the largest initial public offering (IPO) ever with the e-commerce conglomerate, Alibaba. Now, the billionaire tech tycoon is rewriting history once again with his newest venture, Ant.
The culmination of Ma’s first IPO took place on Sept. 19, 2014. Alibaba, the world’s largest retailer and e-commerce company, opened on the New York Stock Exchange with cheers erupting from the trading floor and a wave of money flowing onto the company’s balance sheets. After Ma raised a record $25 billion with Alibaba, then the largest IPO of all time, the oil titan Saudi Aramco beat his record with a $29.4 billion public offering last year. Many successful businessmen would have been content with breaking one of the most impressive records in business one time; Ma was not one of them. This month, he managed to top his old record, along with Saudi Aramco’s, breaking the IPO record not once, but twice.
Ma’s latest venture, Ant Group, operates Alipay, a “digital wallet” that is the world's largest mobile and online payment platform, and Yu'e Bao, formerly the world’s largest money-market fund. It also runs Zhima Credit, a third-party credit rating system. Ant is the world’s largest fintech firm, with a sky-high valuation of up to $320 billion. Let’s put that number in perspective for a minute — Industrial and Commercial Bank of China, the world’s largest bank by assets, still has a lower valuation than Ant. This incredible success has allowed Ant to raise nearly $35 billion in the most highly-anticipated IPO of the year, which will be a dual listing on both the Hong Kong (priced at $10.32) and Shanghai (priced at $10.27) exchanges. To further continue illustrating the massive investor interest, the stock’s order books were oversubscribed only one hour post-launch.
Alipay was merely started by Ma as a side-project with the intent to aid China's online shopping industry. There was a persistent issue of the only viable option for most consumers and business owners being inefficient state-run banks with poor customer service. For example, a small shop owner who would only need a few hundred dollars to make it through the month would feel as if the loan process was not worth the trouble. This was clearly a serious problem for a large number of China’s citizens and, ultimately, the economy as a whole. Therefore, Ant was a game-changer for an industry desperately in need of an efficiency boost. Now, because of Ant, the loan process is easier than ever before. People can quickly apply for and get decisions on small loans. Additionally, they can pay for items with only the tap of a button (similar to Apple Pay), and invest as little as the equivalent of 15 cents into big money market funds.
An important thing to note was Ma’s remarks at a recent business conference in Shanghai. “It’s a miracle,” said Ma, that the pricing for the IPO was determined in China, not the typical New York’s Wall Street route. He indicated that there is a shift in China’s major cities that are becoming an alternative to Wall Street. Especially with the tensions between the United States and China at the moment, Chinese companies may follow suit and begin taking this alternative path. The Ant IPO will certainly increase the Chinese stock markets’ credibility and pave the way for more local IPOs.
As far as Ma’s personal wealth is concerned, due to his 8.8% stake in Ant, the IPO will catapult him to a net worth of $71.1 billion, placing him 11th for the wealthiest individuals in the world. With more eye-popping valuations and money flooding into the tech industry in recent years, one cannot help but wonder if this time next year there will be an even higher IPO, shattering records yet again as the wheels of the economy continue to spin.
Photo Caption: Ant Group’s highly anticipated IPO is the largest of all time. Photo Credit: Pixabay.com