Unveiling the financial situation for the first time, the startup in which Jack Ma owns a 50% stun: Attracting 1 billion Alipay users, reaching a net profit of $ 3 billion in the first half of 2020

Ant Group – Chinese financial technology giant controlled by billionaire Jack Ma has revealed its financial position for the first time in the IPO prospectus. Accordingly, the numbers they achieved “stunned” with investors and analysts.

Specifically, Ant generated a net profit of 21.2 billion yuan ($ 3 billion) in the six months to June 2020, revenue of 72.5 billion yuan ($ 10.5 billion). That shows, their net profit margin reaches 30%, which is very high compared to a relatively young company that is growing at such a rapid rate.

The Hangzhou-based company is targeting dual IPOs on the Hong Kong and Shanghai exchanges this fall with a market value of $ 200 billion expected after IPO. In the prospectus, Ant says it plans to sell a 10% new stake, and if at that rate they can raise as much as $ 20 billion.

Ant revenues and profits over the years. (The figure for 2020 is the first half of the year).

If all goes well, Ant will make Ant one of the most valuable companies in China and the world’s leading financial technology company, the size of PayPal Holdings and Mastercard with market value. $ 233 billion and $ 344 billion, respectively.

Ant started in 2004 when Alipay was first created to make payments more convenient on e-commerce websites operated by Alibaba. Alipay then expanded to be a payment provider on the web, in stores and other retail and business locations.

Ant later split from Alibaba in 2011 and the company became Ant Financial Services in 2014. They changed their name earlier this year to Ant Group to accommodate their new businesses.

In the past, Alibaba IPOed on the New York Stock Exchange and raised $ 25 billion in 2014. Currently the group is the third largest shareholder in Ant, Jack Ma controls 50.5% of the shares with voting rights and is Biggest investment in Ant.

The Chinese use Alipay in many financial transactions. Ant has 711 million monthly active users as of July and more than 1 billion active users annually, according to the group’s statement.

Ant said its revenue grew 40% in the first half of 2019, earning 120.6 billion yuan ($ 17 billion).

About 43% of revenue last year came from digital payments and merchant services. Ant said Alipay handled 118 trillion yuan ($ 17 trillion) worth of transactions in China as of July, and international transactions were worth 622 billion yuan. Alipay charges merchants based on a percentage of transaction value and more than 80 million businesses use their mobile apps.

A large part of Ant’s revenue comes from a digital fintech platform – collecting technology service fees from major banks, asset managers and insurance companies using Alipay for loans and funds. mutual assistance, insurance or other product offerings to customers.

Ant said that their customers and their small business lending platform had 2.1 trillion yuan ($ 300 billion) in credit balance and their wealth management platform ran 4.1 trillion yuan (590). billion USD) investments as of July 30. Most loans come from banks with which the company works.

In the first half of 2020, Ant said that the Covid-19 epidemic and blockade orders were hurting purchasing power across China, especially in physical stores. That also negatively affects the growth rate of transaction volume and the business performance of the company’s lending segment. However, a few analysts still saw Ant’s first-half sales surge, showing the company’s ability to cope with economic shocks.

“The impact of the Covid-19 translation is not slowing down their growth as people think. Instead, it creates momentum for online transactions to explode,” said one expert.

Despite its successful business and booming growth, Ant has recently received careful scrutiny from lawmakers in China. For a long time, companies have been fighting for themselves as a technology company, not a financial services company.

Ant also said that the tensions between the US and China lead to a bad relationship between the two countries causing a “potential conflict between the two countries over trade, technology, finance and other areas”. That has the potential to increase regulatory or restrictive challenges for Chinese tech companies including Alibaba and Ant themselves.

Two years ago, Ant was valued at $ 150 billion after a $ 14 billion funding round.

The IPO documents show a list of many domestic and foreign investors entering here including the Chinese national pension fund, the foreign investment fund of Singapore and Malaysia, the private capital company General Atlantic and Warburg Pincus …

The company plans to use 30% of its IPO capital to expand its user base in digital services, 40% for innovation research and development, and the rest for cross-payments. border and other general uses of the corporation. Ant currently has 16,660 employees as of the end of July.