Ant Group has just pulled off the largest initial public offering (IPO) in history when it goes public on the Hong Kong and Shanghai exchanges on November 5. The tech company priced its dual listing on the Hong Kong Stock Exchange and Shanghai's Star Market at 80 Hong Kong dollars ($10.32) and 68.8 yuan ($10.26) per share respectively, according to regulatory filings released Monday. That means the initial public offering will raise some $34.4 billion, eclipsing flotations by Saudi Aramco (US$29.4 billion) last December.
Regarding the IPO, Mr. Sam Radwan, CEO of Enhance International, as a consultant, had an interview by Mr. Simon Rabinovitch, a special correspondent of The Economist.
As the the most integrated fintech platform in the world, Ant Group's business can be divided into four sections according to its revenues: digital payment, credit lending, asset management and insurance. As the basic business of Ant Group, digital payment has collected a large amount of user’s data. With its diversity, richness and high-frequency characteristics, digital payment provides the data source for the rating model of Ant Group's credit lending business. Relying on the platform advantages formed by digital payment and credit lending, Ant Group began to expand its asset management and insurance business. The asset management business started with Yu'ebao and now has expanded to include 170 companies and more than 6,000 products. Ant has become one of China’s most powerful distribution channels for investments. For the insurance business, Ant’s push into insurance happened more recently. It mainly cooperates with insurance companies to sell insurance products such as life insurance, auto insurance and health insurance.
However, with the rapid growth of Ant Group and the uncertainty of the global environment (the trade war and COVID-19), there exist four kinds of risks that could slow it down: regulatory, competitive, overseas business expansion and those that are intrinsic to its own model.
For example, as an asset management and insurance distribution platform, Ant only aims for high-volume, retail investors, and the value of products is relatively simple. “They are great at selling penny products. But that’s not where you make the money in insurance,” says Sam Radwan of Enhance. To close a deal on a valuable, complex policy like a variable annuity, brokers typically speak with consumers several times. “No ordinary customer is going to trust an online broker for something that complicated,” says Sam.
Despite all these limitations, one lesson from Ant’s decade in existence is that future possibilities remain vast.
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