What to expect from Ant’s pending IPO disclosure

on Aug 25, 2020
Updated: Sep 9, 2020
  • Ant will release in the coming days financial documents as part of the IPO process.
  • The Chinese company will go public in Hong Kong and in Shanghai this year.
  • Alibaba owns a 33% stake in Ant.

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Jack Ma, one of the co-founders of China’s e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) will see his other company called Ant become a public entity by the end of the year. But within the coming days, investors will finally gain insight into the company’s inner operations.

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Financial disclosure days away

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Ant, formerly known as Ant Financial, will forego an American listing and proceed with a Hong Kong and Shanghai initial public offering by October. The company is widely expected to release the necessary regulatory documents this week, The Wall Street Journal reported. This will give investors for the first time ever a glimpse into how much the company makes.

Ant’s core business is Alipay, the online and app payment processor used by nearly three-quarters of a billion people in China alone. Alipay’s roots trace to serving as Alibaba’s payment process and today Alibaba owns a 33% stake of Ant after it was spun off into its own separate company.

Today, Ant offers personal credit lines, small-business loans, insurance, and investment funds, according to WSJ. The company is also considered the world’s largest money-market mutual fund after introducing an investment product for people to invest their spare cash.

Ant was always secretive

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The close connection implies investors were merely teased with some of Ant’s metrics. For example, Alibaba’s latest earnings report signaled Ant generated $3.5 billion in profit for Alibaba for the six month period ending in March. However, it was accompanied by very little commentary on how the profit was earned.

Two Ant investors told WSJ that the company did hold regular meetings with its investors and shared some quarterly financial metrics. However, the information was always described as “very limited” and with “some delay.” 

Ant historically never added outside investors to its board of directors, a common practice among fintech companies of all sizes. But ahead of its regulatory filing, the company added within the last week three independent directors.

David Dai, a senior research analyst at Bernstein, told WSJ that few people disagree that Ant is a “good company.” But there is also a consensus that it “isn’t easy to understand their businesses and advantages.”

$200B valuation?

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Ant is expecting the market to value its stock at $200 billion, marking an impressive run for the company founded in 2014 and valued at around $45 billion in 2015. However, investors are marking their Ant holdings at vastly different valuations.

Fidelity Investments valued their holdings of Ant as if the company is worth $305 billion, according to a recent U.S. Securities and Exchange Commission filing. By contrast, T. Rowe Price Group earlier this year marked its stake of Ant as if the company is worth just $188 billion.