Zhejiang Ant Small & Micro Financial Services Group—aka Ant Financial, the parent company behind Alibaba Group’s Alipay—plans to launch its IPO in China in either late 2016 or early 2017. Before the launch, Ant will pursue an initial private placement of 10 percent of its shares worth $4 billion, state-run media announced late last month.
This first round of funding will be limited to Chinese government-backed firms. In another move that keeps the state close, Ant has chosen Chinese International Capital Corporation (CICC) as its financial adviser. CICC is known for handling the major IPOs of China’s large state banks like the Agricultural Bank of China. Ant’s government-backed investors currently include the Chinese National Social Securities Fund, Postal Savings Bank of China, and Chinese Development Bank Capital.
Its multiple ties to the Chinese government may help Ant avoid regulatory hurdles that have hindered rival Tencent Holdings Ltd in its operations in China. Both Ant and Tencent are developing broad-based mobile payment systems and hope to launch private banks. Ant is attempting to launch its bank—an online option offering small loans to customers and start-ups—this June.
While they wait for the launch, potential investors can watch Ant’s progress, measured by its state relationships and its growth. Ant’s revenue in 2014 jumped a total of 92 percent with a net profit of $415 million, representing a margin of 26 percent. That impressive net profit is expected to have a compound annual growth rate of 64 percent through 2016, according to Reuters.
Ant Financial is valued between $35 billion and 40 billion. It has over 300 million users in China and handles over 80 million transactions daily, while its mobile application, Alipay Wallet, has over 190 million users, according to Forbes. Though a crucial part of Alibaba’s business, the platform spun off in 2011 and was not included in the company’s record-setting IPO last year. As an affiliate, it is still run by Jack Ma and other senior-level Alibaba executives. Alibaba shares in 37.5 percent of Ant’s profits, and may choose to take a direct stake in the company in the future.