Enterprise

Everything you need to know about Alibaba’s finance spinoff

It’ll be the world’s largest IPO

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Photo by David Dvořáček on Unsplash

Chinese financial technology giant Ant Group is all set to raise US$ 34 billion via an IPO (Initial Public Offering). The company’s share will be listed in Hong Kong as well as Shanghai. While IPO’s are a common sight, this one’s going to be a record-breaker. It’ll be the largest IPO on record, ever.

The company’s filing shows it has priced each share for US$ 10.30, giving it a market value of US$ 310 billion. Saudi Aramco, the world’s largest oil company, raised almost US$ 30 billion last year. But today, data is considered the new oil and recent technology listings has proven this. Ant’s sister company Alibaba raised US$ 25 billion in 2014 when the company got listed on NYSE.

So, the most important question remains, why is Ant Group so valuable? We’ll take a deep-dive to understand the company’s operations, investments, and strategic advantages that have earned it the high valuation today.

How was the Ant Group formed?

We’ve all heard of Alibaba, the world’s largest e-commerce company. Founded by Jack Ma, it revolutionized shopping in Mainland China forever. At the heart of this change was Alipay, a system designed to bridge the lack of trust between buyers and sellers. Even though it started functioning in 2004 as a complimentary service to Alibaba, executives realized it had much more potential and could be used outside of the e-commerce website’s umbrella.

In 2011, Alibaba spun-off Alipay into a new company that was called Zhejiang Alibaba E-Commerce Company. The name was soon changed to Ant Financial, followed by Ant Group in the coming years.

Today, Alipay has more than 700 million monthly users, and they’re just in China. On the other hand, PayPal has almost 350 million users globally. In fact, Ant Group reported revenue of US$ 17.7 billion in the first nine months of 2020, a whopping 43 percent raise over the same period in 2019.

The Coronavirus pandemic has turbocharged usage as people have turned to digital payments and e-commerce as a way of maintaining social distance.

Alipay is practically a bank

It may sound impossible, but Alipay is actually a bank without a single physical branch. It offers payment services between customers and merchants and extends loans, insurance, investment options, and more. If you want to survive in China, you can do it without any cash.

Smartphone, QR code payments

Everyone relies on their smartphone for payments, and the country has replaced plastic cards or cash in favor of QR codes. And, Alipay also ensures you don’t have to go anywhere else for your daily needs. Groceries? Alipay. Parking charges? Alipay. Flight tickets? Alipay. The answer to everything is just one app. While WeChat’s Super App model has gotten everyone’s attention, Ant Group capitalized by understanding it’s users on a more personal level.

This has been a common way of paying in China for a while. If you saw the 2018 version of popular teen drama Meteor Garden which was set in China, it was fairly noticeable that store transactions were made via QR code.

The app has access to everyone’s purchase trends, and being a payment layer, it has access to an unimaginable amount of data. Using this, it cross-sells and upsells high-value financial products, directly improving engagement and clocking consistent growth.

Instead of relying on a conventional bank, Alipay is much more convenient, faster, and accessible for the ordinary Chinese.

CreditTech

Ant Group’s most important division has to be CreditTech. It provides quick or instant credit lines to consumers and small businesses. Ant is the largest digital microfinance service provider in China and is viewed as a perfect way to infuse liquidity at the grassroots level. A conventional bank doesn’t possess the technology or the reach that Alipay can provide.

Hence, Ant Group works in tandem with banks and extends simplified financial services to everyone. The Chinese giant works with over 100 banks, and all loans are then securitized at the institutional level.

Services for everyone

Ideally, if you want a loan, you’ll have to apply in a bank, submit collaterals, negotiate the interest rate, and receive the sum. This is a lengthy and slow process that needs higher standards of due diligence. Unfortunately, hundreds of millions of people don’t have access to loans and are not included in the formal banking system.

Ant Group helps bridge this gap. With Alipay, you can maintain a digital wallet on the go, pay anyone within a second, and use other financial services within the app. Based on your spending, income, and lifestyle, the algorithm can understand you at a personal level. These data points can then be used to determine whether you’re eligible for a loan or credit line.

Instead of relying on conventional modes of applying for a loan, most users are prompted with pre-approved offers that are already made, keeping the individual in mind. It takes the platform just a few minutes to approve an application, and money is disbursed almost instantly.

The investment division of the company is called InvestTech and makes it easy for anyone to join up. Choose from a host of options like mutual funds and grow your money in the same app where you usually spend it. Similarly, it has also bridged the insurance industry within the app, and experts claim it could be the largest online insurance services platform in China in terms of premiums generated.

China loves Alipay, what about others?

Currently, 95 percent of Ant’s revenues come from Mainland China. Alibaba has already made massive international bets in markets like India, Indonesia, Thailand, and more.

Alipay supports 27 currencies and works with many international financial institutions to ensure cross-border payments for Chinese traveling overseas and facilitate the international purchase on Alibaba.

It has already won a virtual banking license in Hong Kong and is applying for one in Singapore. Cooperation and partnerships are already functional in Bangladesh, Hong Kong, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, and Thailand.

However, international expansion doesn’t look very promising at the moment because of the ongoing anti-China sentiments. The US has clamped down on Chinese technology companies like Huawei and ByteDance due to security concerns. If the world is worried about data collection via a short-video streaming app, will it be open to a Chinese company whose primary business is based on data collection?

India is a lucrative market, and Alibaba has tried to replicate the same model via its investment in super app Paytm. Indo-China relations have also radically deteriorated in recent months, and Chinese app developers have faced the consequences. Although Alibaba investments remain relatively stable in the country, new growth opportunities are bleak.

We live in a global economy today, and protectionism isn’t exactly helping anyone. However, with the boom in data, the risk has also increased manifold, and countries have to be on the lookout. In the case of Ant Group, their future within Mainland China looks very prosperous.

The most valuable unicorn on the planet is likely to make its hotly anticipated debut on Shanghai’s STAR Market and Hong Kong’s stock market on November 5, two days after the US election.

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Enterprise

Google merges Pixel and Android teams into one superteam

Headed by Rick Osterloh

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April 22, 2024

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For the longest time, Google kept Pixel and Android behind two different teams. While the Pixel team dealt with devices made by and for the brand, the Android team ships a product meant for brands outside of the company’s purview. However, the days of separation are at an end. Google is officially merging its Pixel and Android teams together.

In a shocking announcement, the company has confirmed that the teams handling hardware and software will fall under a single team headed by Rick Osterloh. Prior to the merge, Osterloh was the senior vice president of devices and service, which was Google’s hardware branch. He will now oversee both hardware and software.

Because of the new leadership change, Hiroshi Lockheimer, former head of Android, will now move on to other projects within Alphabet. Of note, the change is not harsh for Lockheimer. He and Osterloh had been contemplating on the merge for a while.

Now, why the change? As is the case with everything today, it’s all because of AI. Speaking to The Verge, Osterloh explains that the merge will help with “full-stack innovation.” With how technology is these days, it’s now impossible to develop AI without having a close eye on hardware, such as in Google’s AI developments for the Pixel camera. Merging the teams will help streamline development, especially when hardware is involved.

Despite the change, outside brands, like Qualcomm’s Cristiano Amon, remains confident of Android’s capabilities outside of Google. Just expect more AI coming out in the near future.

SEE ALSO: Google might offer satellite connectivity soon

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Enterprise

China starts banning AMD, Intel, and Windows

Only from government devices for now

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March 26, 2024

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The ongoing trade war between the United States and China is putting a lot of companies out of business in one country. While all eyes are currently on America’s crusade against TikTok, China has launched a salvo of its own. The country has started banning AMD and Intel, starting with government devices.

Recently, as reported by the Financial Times, China has introduced a new rule that bans American chipsets and servers from government agencies. The new ban includes AMD, Intel, and Microsoft Windows.

In lieu of the now-banned brands, Chinese government agencies must use approved brands from a list of 18 Chinese manufacturers. Unsurprisingly, the list includes Huawei, another brand involved in the ongoing trade war. (Huawei is still banned on American soil.)

As with bans from America, China’s latest rules stem from a desire to implement national security. Both countries allege that using brands from the opposing side will open a potential avenue for transferring classified information.

Currently, the ban against the American chipsets are only affecting government devices. However, if it follows the same trajectory as Huawei and TikTok in the United States, a government-only ban might soon lead to an all-out ban on consumer devices. As TikTok is currently hanging in the balance, it’s unlikely that the trade wars will cool down anytime soon.

SEE ALSO: TikTok ban bill moves closer to becoming a law

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Enterprise

US sues Apple

For creating an illegal monopoly on smartphones

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March 22, 2024

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So far, Apple’s greatest enemy has been the European Union. Months and months of claiming that the company engages in anti-competitive practices, the region has successfully caused Apple to drastically change a lot of things about the iPhone including the Lightning cable. Now, a new challenger wants Apple to answer for its supposed grip on the industry: the United States government.

Today, the Department of Justice is officially suing Apple for supposedly monopolizing the smartphone industry and stifling competition. The lawsuit alleges that Apple’s lineup of products prevent users from trying out other brands. For example, Apple limits how well a third-party smartwatch works on an iPhone, pushing users to go for an Apple Watch instead.

The lawsuit also includes an important pain point in Apple’s fight in Europe. It says that the company makes it difficult for iPhone users to communicate with Android users (and vice versa). Late last year, the company already committed to supporting RCS as a messaging standard, finally easing communication between the two systems. Their adoption has yet to arrive, though.

Though not as stringent as Europe, the American government is no slouch when it comes to questioning its own companies for pursuing anti-competitive practices. In the past, it went through Google and Spotify to protect the interests of its citizens. The lawsuit against Apple is no different, gathering signatures from sixteen states.

For Apple’s part, the company aims to get the case dismissed, alleging the lawsuit’s unfair scope of just the American people when it targets the entire world.

SEE ALSO: Apple opens first Developer Center in Southeast Asia

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