Why is Ant Technology’s valuation so high? The basis for Ant Technology’s $200 billion valuation

On July 20, Alipay’s parent company Ant Technology announced that it will launch a plan to simultaneously issue and list on the Shanghai Stock Exchange Science and Technology Innovation Board and the Hong Kong Stock Exchange Main Board. According to its target valuation and the issuance rules of the Science and Technology Innovation Board, if everything goes well, Ant Technology may set a record for the largest IPO in the history of A-shares and even the world.

It is reported that Ant Technology is seeking to go public with a valuation of US$200 billion. If roughly calculated according to the rules of the Science and Technology Innovation Board, its fundraising in A-shares can reach about US$20 billion, equivalent to about 140 billion yuan, which is equivalent to the total IPO fundraising amount in the Shanghai and Shenzhen stock markets in the first half of 2020. Before that, the largest IPO record in the history of A-shares was that of Agricultural Bank of China, which raised 68.5 billion yuan.

Ant Group is the parent company of Alipay, China's largest mobile payment platform, and the world's leading open fintech platform. Since it "set up its own business", it has overcome all obstacles and has grown into China's largest financial unicorn in just 6 years.

Where did China's largest financial unicorn come from?

Taobao was founded in 2003, and the following year, Alipay was born to solve the credit problem in e-commerce transactions. The birth of Alipay can be said to have brought about a guaranteed transaction model in e-commerce transactions that solves the credit problem. This transaction model of first paying the transaction "intermediary" and then paying after receiving the goods has successfully laid the transaction foundation for China's e-commerce market and successfully opened the door to the development of China's e-commerce.

In the following 10 years or so, Alipay kept pace with the development of the times and gradually developed from a tool serving e-commerce transactions to a payment platform serving various industries. In June 2013, Alipay broke through its greatest function - payment, and achieved a "thrilling leap" from payment to finance, officially launching the "Yu'ebao service".

Originally, this business was not so popular, but due to its trading method of starting purchase at one yuan and redemption at any time, it became the origin of the popularization of money market funds in China. It is precisely because of this that Alipay has transformed from a simple payment "intermediary" into one of the most powerful financial products, and Yu'ebao has transformed from an inconspicuous money fund into a financial tool that many banks are wary of.