Venture: Ant IPO

Ant Group

What would make this year of stock market volatility any crazier? A multi-billion-dollar company going public from the famous Jack Ma. Chinese billionaire Jack Ma is the co-founder of Ant Group, an affiliate of the Chinese Alibaba Group. Ant Group is currently the highest-valued Fintech company globally and is planning on going public, but many problems have arisen. A sudden halt in the company's initial public offering left employees, investors, and shareholders shocked. This event would be a record-breaking initial public offering (IPO) for the Fintech world, and many are curious about what is keeping this unicorn company from going public. A unicorn company is a privately held company that is worth up to $1 billion.

Fintech

FinTech refers to innovation in the financial and technology crossover space, typically used for companies or services that use technology to provide financial assistance to businesses or consumers. Any company that provides financial services through software or other technology, including anything from mobile payment apps to cryptocurrency.

Fintech has branched into many companies and is now vital in everyday business to consumer use, becoming a near vital part in the financial sector. Venmo is the most well-known fintech company, it being used primarily by millennials to make regular payments from a consumer-to-consumer standpoint. Other mobile payment apps like Square get to report to insurance and investment companies, fintech has disrupted traditional financial and banking industries. Fintech companies are even posing a possible threat to traditional, brick-and-mortar banks or financial institution, at first being solely used in their back-end systems but now more widely accessible. From trading stocks to sending your friend money, Fintech investments are growing, offering a variety of features, and seeing a prosperous future.

Ant

On November 5th, the Chinese based Fintech company, Ant Group was supposed to go public on the Shanghai Stock Exchange. Ant Group was considered a unicorn stock, with its value at $1 billion, inspiring many to become investors. The prices Ant Group set in Shanghai and Hong Kong valued the company at $313 billion, making it worth more than most American and Chinese banks. However, right before the IPO, Chinese regulators examined the company and saw that Ant Group might not be following the financial technology rules. There were no specifics on what rules Ant Group was violating, with little transparency between the company and its investors it leaves room for uncertainty.

Ant Group IPO Comparison

There is some speculation on whether or not these Fintech companies can be trusted as many of them are unregulated nor are they backed by established and trusted financial institutions. For example, the FDIC does not insure Venmo, so if there was a breach in security and consumers lost their money, there is no insurance on them getting their funds back.

Ant Group's primary function is providing a fast-growing environment for the microloan business, which offers short-term credit to hundreds of millions of individuals and scores of small businesses. Consumers like this business model because it allows them to get small loans at a faster without all the paperwork that they would at a bank. This easy method of borrowing money allows a lot of room for economic growth. Given that small companies are able to get a loan under their model, cities could see a significant change in areas that have not seen growth in years.

Last week, Ant Group’s controlling shareholder, Jack Ma, went to a rare joint meeting with Chinese regulators to discuss the financial sector's health and stability. Andrew Baston, director of China, research in Gavekal Research, stated, "The government's goal is to remind the company who is in charge of the financial system, not to put it out of business."

This is an uncommon practice in the investment sector, before a company is going to go public there financials have been looked into way beforehand . When shareholders or auditors must go in and look over their company’s financial health, potential investors second guess the company. On the other hand, this could be a potential good thing for the Ant Group because it could put more faith in a trusted company if they pass the financial test from regulators, with it being a seal representing the government’s trust

Overall

Ant Group will be a success in the long term; even with some speculations that the company may have financial problems, there will be a solution, and investors will maintain trust in the company. Jack Ma is also the co-founder and executive chairman of Alibaba Group, a multinational technology conglomerate that has seen great success since it starts. These factors will allow the Ant Group to perform to the same degree, if not superiorly, as Alibaba and enrich the global economy. When Ant Group is able to establish themselves in China they will begin to branch out across the world and give people from across the world the opportunity to grow.