The biggest IPO in history

After Aramco, the Saudi hydrocarbon company, it will be the turn of Ant Group, the financial subsidiary of Alibaba. The financial world has unveiled the historic amount the Chinese fintech could raise in an IPO, dethroning Saudi Arabian Oil Company and its January 12, 2020, IPO.

Alibaba is preparing for the IPO of its subsidiary, which mainly supports the business of Alipay, a giant born in 2004 to facilitate online (e-commerce) transactions. According to the latest forecasts, Ant Group, also known as Ant Financial, is expected to raise the equivalent of $34.5 billion with its scheduled November 5 debut on the two stock exchanges in Hong Kong and Shanghai.

310 billion valuation
The calculation of this amount is explained by the issuance of 1.67 billion shares in Hong Kong alone, at a price of 80 Hong Kong dollars. The remaining 1.67 billion shares issued on the Shanghai Stock Exchange would complete the offering, also at an expected unit price of 68.80 Chinese yuan.

Such a deal would take Ant Group into a higher orbit than US competitors such as PayPal and Square. At $80, the Chinese fintech would then be estimated to be worth $310-313 billion. On the other side of the Pacific, in New York, PayPal is far behind with 232 billion and Square 75 billion.

Ant Group would include both valuations, while the US companies are presented as pillars of the payments sector. But Ant Group, through Alipay, already had 800 million users in 2015, well ahead of PayPal’s 340 million. Its growth prospects in Europe are just beginning to materialise.

In France, its strategy is to reach merchants by offering them its payment solutions. At the end of 2019, Alipay declared that it had expanded to 800 Franprix shops, but also to Etam and Maje. Ant Group is now targeting banks to further democratise its payment compatibility.

Competition from Tencent
Estimated at $310 billion after the IPO, Ant Group’s valuation will still not be as high as its direct Chinese competitor, Tencent. The listed giant has seen its share price rise several times since its inception, notably in March during the health crisis, which boosted new players in the electronic payments market. It is currently valued at $538 billion.

The two giants that defied Wall Street will fight for a piece of the pie in the European market. However, fintech news from the Old Continent – especially in France – is more associated with the name Tencent. At the beginning of the year, it became known as a participant in two fundraising campaigns for French startups: neobank Qonto and payment service Lydia.

November 5 will therefore be a special day for the global payments market. As a reminder, in addition to Chinese and American competition, the sector is also at the interface between fintech strategies, online banking and technology giants. Billions of dollars need to be recovered over the next few years, making it one of the priorities of the new financial technologies.

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