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.
— Ant Group (@antgroup) October 27, 2020
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.
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.
— Alipay (@Alipay) August 13, 2020
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.
MediaTek hosts world’s first demo of Wi-Fi 7
Here’s what to expect
We’ve come a long way from dial-up. Now, the name of the game is Wi-Fi 6. Amid the rise of 5G connectivity, the home internet sector is adopting the current standard for their devices. But, of course, the advance of technology is not stopping. As Wi-Fi 6 tries to take over the entire market, the industry is already working on Wi-Fi 7. With development well underway, what can you expect from the upcoming standard?
Naturally, better speeds. Recently, MediaTek showcased the world’s first live demo of the new technology. In an impressive show, the standard will reportedly achieve speeds 2.4 times faster than what Wi-Fi 6 can do. The technology can maximize uses for the current spectrums available for Wi-Fi at up to 6GHz. The technology can also reduce latency and interference using MLO and MRU features.
According to MediaTek, Wi-Fi 7 will support the ever-growing need for faster internet speeds brought on by emerging uses for online users. These needs include AR/VR applications, cloud gaming, 4K video calling, and 8K streaming. With technology advancing the way it is, high-speed internet — even faster than what’s available today — is turning into a necessity to cope with multi-user households.
MediaTek predicts that products that can support Wi-Fi 7 will start coming out in 2023.
Facebook faces British privacy lawsuit worth billions
For allegedly selling its users’ data
The hits just don’t stop coming. Since being called out for alleged manipulation during the 2016 elections (and arguably before that), Facebook has endured hit after hit from privacy pundits, security firms, and global courts. Now, after much deliberation, criticisms and lawsuits against the platform are finally coming to roost. In Britain, for example, Facebook stands to lose billions in a privacy lawsuit from Britain.
As reported by Reuters, Britain’s Financial Conduct Authority senior adviser Liza Lovdahl Gormsen filed the huge lawsuit to represent British citizens who used the platform between 2015 and 2019 — which approximates 44 million people. The suit alleges that Facebook used unfair terms and conditions to force users to give up their rights to their own information. The entire lawsuit is worth GBP 2.3 billion (or approximately US$ 3.15 billion). Though Facebook is worth over US$ 100 billion now, such a lawsuit likely isn’t insignificant to the company.
But, of course, it doesn’t come without precedent. Last year, the company was scrutinized extensively because of whistleblower Frances Haugen’s revelations. According to the former Facebook employee, the platform knowingly creates ruptures in societies everywhere in the world. Besides its effect on mental health and geopolitics, Facebook was also criticized for selling personal data and treating its users as marketable products.
While Britain’s claim is already extensive, it is far from the only country looking to break the company up. The platform is also facing issues in its own home turf for the same charges. The year is just starting, and this likely won’t be Facebook’s last trip to the legal battlefield.
Samsung inexplicably delays Exynos 2200 launch
No new date set yet
Before launching the next Galaxy S flagship series, Samsung often unveils the attached Exynos processor ahead of time. However, this year’s Exynos 2200 is still suspiciously absent. According to sources, Samsung was initially set to launch the new chips on January 11. Since it’s already February 12, the chip’s launch is obviously delayed for an inexplicable reason.
The delay did not come with any warning. The Exynos 2200’s launch date came and… nothing. No word from Samsung on a delay reason or even a new launch date. Even Ice Universe, one of the most knowledgeable sources for Samsung, is scratching their head, wondering why Samsung suddenly backed out of the date.
It isn’t Samsung’s first delay, though. Since the start of the ongoing COVID-19 pandemic, the world is going through a massive semiconductor shortage. Several devices have been delayed or are undergoing stock problems. Samsung had already pushed back dates in the past. However, this is a rare last-minute delay.
Of course, despite the delay, Samsung still has time to release the Exynos 2200 before the Galaxy S22’s launch. According to a recent source, Samsung is set to launch the next flagship series on February 8. The upcoming chipset will reportedly perform at par with the recently launched Snapdragon 8 Gen 1. Amid inexplicable delays, Samsung still has several launches up its sleeve.
Postponements likely won’t mean much in the grander scheme of things, but it will be an interesting tale to hear why Samsung had to back all of a sudden.
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