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All about Ant Group, the next big tech IPO

All about Ant Group, the next big tech IPO

Raymond Zhong,

The New York Times

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The logo of Ant Financial Services Group, Alibaba's financial affiliate, is pictured at its headquarters in Hangzhou, Zhejiang province, following the coronavirus disease (COVID-19) outbreak, China October 26, 2020. Aly Song, Reuters/file

One of China’s most influential tech companies, the internet finance titan Ant Group, is poised to raise a boatload of cash by selling shares.

The sale puts another stamp on China’s importance as a digital powerhouse. But it also shows how the tech world is fracturing.

The company could be worth more than many global banks after its share sale, yet its business is highly concentrated in just one country: China. Instead of listing in New York, as many other Chinese internet companies have done, Ant is going public in Hong Kong and Shanghai.

Here’s what to know about the company and its initial public offering.

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Ant is Jack Ma’s second tech giant.

Around the turn of the millennium, the internet was a lawless frontier, not least in China. Online shopping was a gamble. Buying and selling took place largely between strangers. Nobody could be sure they weren’t being defrauded.

Alibaba, the Chinese e-commerce group, had an idea for cultivating trust. In 2003, it created a service called Alipay that held on to payments until buyers confirmed that they were satisfied with their purchases. If the items were fake or never arrived, the money was refunded.

Alipay helped Alibaba’s bazaars take off. Jack Ma, Alibaba’s co-founder, spun the service out in 2011 as a separate company, setting off a tiff with Yahoo, which was then a major Alibaba investor.

Today, Alibaba owns a one-third stake in Ant. Ma is Ant’s controlling shareholder, although he is not part of its management.

Ant’s executive chairman, Eric Jing, and chief executive, Simon Hu, both worked for years in Alibaba’s orbit. Ant has 16,660 employees.

Life is different with Alipay.

When people across China want to pay for something, they don’t reach for their wallets. They grab their phones.

With Alipay and another smartphone app, the social platform WeChat, exchanging money is a matter of scanning a QR code — at an in-person cashier, during checkout at an online store or face-to-face with a friend. Shops and restaurants still accept cash, though often begrudgingly.

Over time, Alipay has come to host other services, too. People in China use it to shop on credit — no plastic card required. They take out small loans, invest their savings and buy health and life insurance. Fees from those businesses accounted for more than half of Ant’s revenue last year.

The app is a big deal in China.

Alipay has more than 730 million monthly users, more than twice the U.S. population. By comparison, PayPal has 346 million active accounts.

Ant handled more than $17 trillion in digital payments in mainland China during the 12 months that ended in June. PayPal says its total payment volume in 2019 was $712 billion. Ant also enabled around $300 billion in credit to consumers and small businesses.

When the company goes public, it could be valued around $310 billion. That would make it worth about as much as JPMorgan Chase, and much more than Citigroup and Goldman Sachs.

Alipay is no slouch technologically, either. Ant says its systems processed 459,000 payments a second at the peak of a Chinese shopping holiday last year. Visa, by contrast, says it can handle 65,000 transactions a second.

Ant is huge not only because China’s population is huge. Its growth was also helped by the fact that China had previously been so far behind in digital finance. Few people had credit cards. The big government-run banks were slow to modernize.

But how much bigger can it get?

Around 95% of Ant’s revenue last year came from mainland China. The company has invested in Paytm, an Indian payment app, and acquired EyeVerify, a startup in Kansas City, Missouri, that makes biometric authentication technology. But for now at least, Alipay seems unlikely to implant itself so deeply in another country’s financial system.

Even in China, the government is wary about fast-growing financial products. The Communist Party has clamped down on lending fraud and questionable investment schemes. Regulators have also criticized Ant for not adequately protecting users’ personal data.

The fact that Ant has survived for so long in China under regulatory pressure means it will probably continue working around whatever the authorities throw at it, said Kevin Kwek, an analyst with the research firm Bernstein.

“If you’re going to sell anything to consumers that’s financial services, the regulators have to scrutinize it,” he said. “I don’t think they’re trying to find ways to kill Ant.”

Watch more in iWantv or TFC.tv

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Palace expects boost in PH investments after removal from dirty money ‘gray list’

Palace expects boost in PH investments after removal from dirty money ‘gray list’

Katrina Domingo,

ABS-CBN News

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Malacañang expects an increase in foreign direct investments after the Philippines was removed from the Financial Action Task Force’s (FATF) grey list earlier this week. 

The Philippines was removed from the list of nations flagged for weak anti-money laundering safeguards after the FATF acknowledged that the country was able to “meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021.”

“Our well-earned exit from the Financial Action Task Force’s (FATF) grey list boosts our drive to attract job-creating, growth-inducing foreign direct investments,” Executive Secretary Lucas Bersamin said in a statement.

“This seal of good financial housekeeping benefits overseas Filipinos as it would make cross-border transactions faster and cheaper as layers of compliance barriers are removed,” he said.

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Bersamin credited the country’s exit from the grey list to the “multiple moves made” the administration pushed to “finally dismantle structures that could be exploited by money launderers and terrorism financiers.”

“For so long, our investment attractiveness has been dragged down by this dirty money haven label,” the Executive Secretary said.

“This hard-fought administration win in its battle against money laundering will be preserved and protected through consistent compliance with global standards.”

The Anti-Money Laundering Council (AMLC) earlier said that “the exit will reduce international fund transfer requirements, benefitting Filipino individuals and businesses.”

Bangko Sentral ng Pilipinas (BSP) Governor and AMLC Chairman Eli Remolona, Jr. called the feat a result of “strong cooperation” between the government and the private sector.

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