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Ant Group: what every investor needs to know
What is Ant Group?
Ant Group has become one of the world’s most valuable Fintech companies, and is considered one of the five largest financial companies in the world. Ant Group’s offices are located in the city of Hangzhou in China.
One of the largest IPOs in history
In 2018, only a few years after it was established, Ant Group was already worth $150 billion, quickly making it one of the world's most valuable startups. The company made its IPO debut on the Hong Kong and Shanghai Stock Exchanges. In Shanghai, the IPO took place on STAR, one of the two independent stock exchanges operating in China. Many consider STAR to be the Chinese equivalent of America's Nasdaq.
While the company has not reported why it chose to make its market debut specifically on these two stock exchanges, it is very important to note that it did not choose to list itself in the US or in one of the major European financial centres.
What is a Dual Listing?
The decision behind its dual listing can be attributed to the fact that debuting in two separate exchanges might improve Ant Group's share liquidity, since it is being traded in more than one stock market. A dual listing can also enable the company to diversify its capital-raising activities, and not depend on the performance of one specific market.
Even though some might not be familiar with the term “dual listing,” since Ant Group is one of the few companies to choose this path, it is important to note that several other companies have made their public offering debut in two separate markets before Ant Group. These include Unilever, Royal Dutch Shell and ABB Group.
Ant Group’s IPO
Before it went public, many analysts assumed that the profit of Ant’s IPO would surpass those of giant companies such as Facebook, Visa and SoftBank, which opened their doors to the public prior to Ant, believing that the Group’s Initial Public Offering would be the largest to date.
Alibaba, which owned a third of Ant Group’s shares, raised a record $25 billion when it debuted on Wall Street in 2014. Back then, that number had only been surpassed once by the massive oil company Saudi Aramco, which raised 29.4 billion dollars in its Riyadh IPO in December 2019.
It was unknown what the actual value of the Group was before the Ant stock IPO, and the company did not release any information on how much it was planning to raise, but at the time, many analysts assumed that the company would most likely be worth as much as $300 billion.
History of Ant
Ant Group received its worldwide recognition by operating a mobile and online payment platform known as Alipay. It launched the platform in 2004 as an online payment service for customers of Alibaba, an online shopping network. Jack Ma, one of Alibaba’s co-founders and a well known Chinese billionaire, understood that consumers in China did not fully trust online transactions and decided to create the mobile payment platform.
In 2011, Alipay disconnected itself from Alibaba and became an independent mobile payment service. It expanded all over China and even to other countries.
The company offers similar services to Stripe, PayPal, Apple Pay, Venmo, FICO, and other large fintech companies in the US.
Ant Group was established as a holding company in 2014 to provide financial services such as loans, wealth management, insurance, and money market funds, but also as a parent company to Alipay. The company rebranded itself as Ant Financial, distancing itself from Alibaba, and became even more independent by offering a wider range of fintech services. Ant CEO, Eric Jing, explained that Ant Financial is named after the tiny insect because it helps out “the little guys.” Ant also generates profits from other revenue streams, such as online loans. And while some of the capital is provided by Ant Financial itself, the majority of the loans are given by Chinese banks, which in turn are mediated by Ant’s Huabei (the company’s virtual credit card company) and Jiebei (Ant’s consumer loan services).
In June 2020, the company, which was previously called Ant Financial, changed its name to Ant Group.
Who owns Ant Group?
Prior to the Ant listing, the majority of Ant Group’s shares were held by Jack Ma. Alibaba itself owned the next biggest share by holding almost a third of the company. Other shareholders include former Ant Group Chairman and Financial CEO Eric Jing, China’s social security fund, early investors, and other current and former Alibaba and Ant executives.
How China-US relations affected the IPO
The company decided to hold its IPO in 2020, at a time when tensions between Washington and Beijing were high over a number of issues, such as the coronavirus pandemic, which many believe originated in China, the Hong Kong security law, and the two superpowers’ ongoing trade disputes. It would not be too far-fetched to connect China-US relations at the time of the IPO, to Ant’s decision to skip over NYSE.
The risks of buying Ant Group stocks
Ant group’s business offerings make it exposed to a wide range of risks, which is only natural when operating in a sensitive and tightly controlled area, such as finance. Below are some of the factors that may impact the Ant stock graph.
One aspect that could make investing in Ant stock a bit dicey is geopolitics, since it may pose a threat to the company's future. In the past, Ant warned that the US’ protectionist policies might interfere with the company’s ability to expand abroad by making it harder for them to compete with local US businesses. At the time, the relationship between China and the US was considered fragile, and the Group even mentioned that they might even have issues hiring new employees, since the US government might make it more difficult for US citizens to work for Chinese-owned companies.
Chinese-US relations may also affect the company's acquisitions. For example, Ant has mentioned in the past that its planned MoneyGram takeover fell through because the US government blocked its efforts to purchase the company with claims of “national security concerns.”
Like many companies around the world at the time, Ant Group was also impacted by the global COVID-19 pandemic. The worldwide lockdown on international travel may well have had a negative impact on the cross-border payment business. The pandemic also slowed spending, and increased defaults on loans sold on the platform.
How to buy Ant shares?
If you are interested in investing in Ant Group shares, you can do so by signing up for eToro’s trading platform and following these steps:
Go to the Ant Group stock page on eToro.
Click on “Trade.”
Choose whether you are going long (BUY) or short (SELL).
Set your desired leverage, Stop Loss and Take Profit points.
Reminder: Non-leveraged, long positions have 0% commission on eToro.
Click on “Open Trade.”
You can also invest indirectly in Ant group by purchasing various ETFs (exchange-traded funds) that include Ant Group as part of their arsenal.
The above applies to registered eToro users. To open an account, follow Ant Group and other IPOs. In order to invest in financial markets, click the button below.