What Ant Group’s world-beating IPO means for Asia’s mobile payment giants

Name: What is Jack Ma’s Ant Group and how does it make money?
Uploaded: 2020-11-02T01:00:11.000Z
Duration: 3 min 4 s
Description: What is Jack Ma’s Ant Group and how does it make money?

The Chinese behemoth has made no secret of its global expansion plans and its first stop is likely to be the relatively untapped market of Southeast Asia

Home-grown unicorns like GoPay and GrabPay won’t be its only competition – smaller players are likely to team up against the big boys, analysts say

Reading Time:6 minutes

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Resty Woro Yuniar

Published: 9:00am, 2 Nov 2020Updated: 4:57pm, 2 Nov 2020

Ant Group’s plans for the world’s largest IPO have turned up the heat in Southeast Asia’s ultra-competitive mobile payments market.

The region is essential for the Chinese company’s expansion blueprint but will be a tough one to crack amid fierce competition from home-grown and well-funded technology and banking firms.

The Chinese financial technology giant is widely expected to raise over US$34 billion with a dual listing in the Hong Kong bourse and Shanghai’s STAR Market on November 5, a price that would put its valuation at more than US$300 billion and eclipse even the IPO of its former parent Alibaba Group Holding (owner of the South China Morning Post), which in 2014 raised US$25 billion. Alibaba’s founder, Jack Ma, controls 50.52 per cent of Ant’s shares.

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What is Jack Ma’s Ant Group and how does it make money?

In its prospectus to the Hong Kong stock exchange, filed in August, Ant said it planned to devote 10 per cent of the IPO proceeds to growing its global user base, which includes users in 11 Southeast Asian countries.

“It has the potential to tap the European and American markets, but I think Southeast Asia will be the first stop. Geographically it’s closer to China and the population is roughly young, compared to the developed markets, and there are a lot of business activities and Chinese investments in this region already,” said Guoli Chen, professor of strategy at INSEAD graduate business school in Singapore.

Southeast Asia is a lucrative market for any digital payment company looking for a new revenue stream. There is a visible trend of more internet users adopting digital payments, particularly as the coronavirus pandemic has encouraged the use of cashless payments.

According to a recent report by consultancy firm Boston Consulting Group, 49 per cent of the region’s urban consumers who already have accounts with commercial banks now use e-wallets. The group projects this to increase to 84 per cent by 2025.

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