About 10 billion yuan worth of five mutual funds that have been allocated shares from Ant Group were sold within an hour of going on sale on September 25. Investors started booking their bit even before the mega listing has begun. The funds will be managed by five different money managers and it was imposed a limit of 12 billion yuan each.
WHAT IS ANT FINANCIAL GROUP?
Ant Group, formerly known as Ant Financial and Alipay, is an affiliate company of the Chinese Alibaba Group. Ant Financial is the world’s highest-valued FinTech company. But it is also the most valuable unicorn company, with a valuation of US$ 150 billion.
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A unicorn company is a term in the business world to indicate a privately held startup company valued at over $1 billion.
Founded by Jack Ma, the group took the name of “Ant”, inspired by the many small traders who, like ants, work to sell their goods on Alibaba. Ant Financial was originally Alibaba’s online payment company, known as Alipay.
HOW DID ANT FINANCIAL ATTRACT 148 MILLION INVESTORS TO THEIR EVENT?
The mutual funds give China’s 148 million individual investors indirect access to the country’s biggest unicorn and its IPO, which will probably become the world’s biggest-ever listing.
IPO is the Initial Public Offering. That is to say, a statutory instrument through which a company obtains public disclosure of its securities. Through what is technically called the creation of the free float, the company obtains the listing of its securities on the regulated market.
Investors can also count on Ant’s fintech businesses, including microlending, wealth management, and insurance products.
While buying shares on the Star Market, the Chinese answer to Nasdaq, requires a minimum of 500,000 yuan in assets in stock accounts, subscription to the funds that will invest in Ant Group can start from 1 yuan through Alipay, Ant’s flagship digital payments app.
ANT FINANCIAL IS CHINA’S LARGEST DIGITAL PAYMENT PROVIDER
It accounts for 50 percent of the market share. According to an analyst at Guosen Securities the digital payments business has entered a period of stable growth and there’s more potential for the marketing of wealth management and insurance products on its digital platforms.
The combination of its large customer base and room for expansion for the industry will bring growth potential to the company.
That’s why Ant’s net income will probably surge 145 percent from a year earlier in 2020 and rise 26 percent in 2021. Alipay estimated that its gross profit for the first nine months this year could increase by as much as 73 percent from a year earlier, because of a boom in China’s digital economy and a decrease in costs.
Unlike WeChat, which belongs to the social world, Alipay was created as a tool to make mobile payments and to manage finances, not only for individuals but also for companies and e-commerce.
Indeed, Alipay was originally created to incentivize purchases on Taobao and Tmall. The aim was to ensure equal access to financial services around the world, leveraging technology to provide small businesses and individuals with inclusive financial services.
The Alibaba giant is considered by Chinese users to be the most professional and secure payment service around.
In 2019, according to iiMedia Research, Alipay was the favorite payment method among Chinese sellers with a percentage of 76.5%, followed by WeChat Pay (71,1%).
ALIPAY VS WeChat
The two Apps share the FinTech market equally, covering almost the entire sector with a percentage of 54% for AliPay and 40% for WeChat Pay. Unlike its competitor, WeChat is basically an application used as a social platform to communicate, entertain, and share content.
A practical example of their marketing diversity is welcome discounts for users.
- AliPay offers numerous discount coupons to spend in e-commerce;
- WeChat Pay offers new users a red package or a gift to be reserved for their WeChat contacts.
Another difference from this point of view is the very structure of the offers.
- AliPay presents its news in the form of discounts and in-App announcements;
- WeChat Pay offers users a Moments section very similar to a Social Network bulletin board.
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