What You Need To Know About The Ant Financial IPO

Hey everyone! This week in Napkin Math we have a guest post from Yiren Lu and Grace Zhang about the upcoming Ant Financial IPO. Hope you enjoy it — let me know what you think in the form at the bottom of the post! — Adam

What: Ant is going public in a $35 billion IPO which would make it the biggest IPO in history. A spin-out of Chinese e-commerce giant Alibaba, they make software products that have democratized access to the financial system in China

When: November 6th

Where: Simultaneous listings on the Shanghai Stock Exchange and the Hong Kong stock exchange

Why is this interesting: The IPO is so massive—this reflects the fact that Ant touches nearly every aspect of Chinese financial life, especially for China’s 250 million unbanked citizens. It is also unique in the sense that Ant chose to list in China rather than in Hong Kong or the US.

✨ History of Ant:

Ant started out by building the digital payment infrastructure necessary to facilitate transactions on Chinese e-commerce giant Alibaba. As PayPal is to Ebay, Ant is to Alibaba—they are both financial infrastructure companies that grew by facilitating transactions on an existing, popular marketplace.
After Ant got to scale, they leveraged their user base to bootstrap other initiatives like loans to small merchants, installment payment plans, consumer-friendly financial products, and wealth management services.
By creating user friendly mobile-first software experiences, Ant is disrupting the traditionally opaque, highly regulated, and hard to access world of Chinese banking. In doing so they have made financial services available to hundreds of millions of Chinese who wouldn’t have previously been able to access them.

💡Ant's Notable Products

Ant doesn’t just make one product—they make several. And their products don’t have easy to understand Western equivalents. Rather, each of their products can be seen as a sort of mash-up of the fintech products familiar in the U.S.

We’ve listed a few of the major products you should know about.

1 - Alipay Mobile Payments

Western Analog: Venmo + Apple Pay + Square.

People in China use Alipay for a variety of everyday transactions like:

Buying groceries at the grocery store (like Square)
Sending money to a friend (like Venmo or Apple Pay)
Giving money to a beggar (like Venmo or Apply Pay—though an uncommon behavior in the U.S.)
Buying shoes online (like Apple Pay)
Calling a Didi—the Chinese equivalent of Uber

Because of Alipay, Chinese consumers basically never have to swipe a credit card, pull out a physical wallet, or input payment information into a web form, the way that American consumers do. Every merchant, online and offline, takes Alipay and its main rival WeChat Pay.

Here’s what the main screen of Alipay looks like—it’s almost like its own operating system: