Ant Group

Ant Group (Chinese: 蚂蚁集团; pinyin: Mǎyǐ jítuán), formerly known as Ant Financial and Alipay, is an affiliate company of the Chinese Alibaba Group. The group owns China's largest digital payment platform Alipay, which serves over one billion users and 80 million merchants, with total payment volume (TPV) reaching CN¥118 trillion in June 2020.[5] In March 2019, The Wall Street Journal reported that Ant's flagship Tianhong Yu'e Bao money-market fund was the largest in the world, with over 588 million users, or more than a third of China's population, contributing cash to it.[6]

Ant Group Co., Ltd.[1]
Native name
蚂蚁科技集团股份有限公司
IndustryTechnology
Financial services
Payment processor
Predecessor
  • Ant Financial Services Group (2014-2020)
  • Alipay financial services (-2014)[2]
Founded16 October 2014 (2014-10-16) in Hangzhou, Zhejiang, China
FounderJack Ma
HeadquartersXihu District,
Hangzhou
,
China
Area served
Worldwide
Key people
  • Eric Jing (Executive Chairman)
  • Simon Hu (Chief Executive Officer)
  • Ni Xingjun (Chief Technology Officer)
  • Cyril Han (Chief Financial Officer)[3]
ProductsElectronic payment processing
Banking
Mobile payment
Brands
Revenue120,618,000,000 renminbi (2019) 
24,071,000,000 renminbi (2019) 
18,072,000,000 renminbi (2019) 
Total assets271,558,000,000 renminbi (2019) 
Owner
  • Hangzhou Alibaba Network Technology (32.65%)
  • Hangzhou Junhan Investment (29.86%)
  • Hangzhou Jun'ao Investment (20.66%)
Number of employees
~16,660
Websitewww.antgroup.com

In October 2020, Ant Group was set to raise US$34.5 billion in the world's largest IPO at the time, valuing the company at US$313 billion.[7][8][9][10] On the eve of the IPO, China stopped the process from moving forward.[11] It was reported that the Chinese Communist Party leader Xi Jinping personally scuttled the Ant IPO.[12]

History

Alipay was rebranded as Ant Group Services on 23 October 2014, and the company changed its name to Ant Group Co., Ltd on 13 July 2020.[5][13] In 2015, Ant Group raised $4.5 billion in a funding round with investors including China Investment Corp (CIC), CCB Trust, China Life, China Post Group, China Development Bank Capital and Primavera Capital Group.[14] In 2015, the company was valued at about $45 billion.[15] As of 26 April 2016, Ant Group had around 450 million annual active users, with Credit Suisse estimating that 58% of China's online payment transactions went through Alipay.[15] In September 2016, Ant Group bought EyeVerify Inc. and the company was rebranded as Zoloz.[16][17]

By late January 2017, Ant Group had a valuation of $60 billion.[16] On 26 January 2017, Ant Group Services Group announced a deal to acquire MoneyGram International for $880 million. In January 2018, the companies decided to terminate the deal after approval was not granted from the Committee on Foreign Investment in the United States due to U.S. national security concerns.[16][18][19] The same month, the Cyberspace Administration of China stated that Ant Group had failed to meet the country's personal data protection standards.[20]

In September 2017, Ant Group formed a joint venture with Sir Li Ka-shing's CK Hutchison Holdings to launch a digital wallet service in Hong Kong.[21] In June 2018, the company launched a blockchain-powered cash remittance service that will allow real-time cash transfers between Hong Kong and the Philippines.[22]

On 9 June 2018, the company raised around US$14 billion, which the Times of India called "the biggest-ever single fund-raising globally by a private company".[23][24]

In November 2019, the company announced to be raising $1 billion for a new fund, with the aim to expand the firm's investment activities in India and Southeast Asia.[25] According to media reports, the fund is meant to provide late-stage funding to startups.[26]

In January 2020, Ant Group has applied for a digital banking license in Singapore.[27]

In August 2020, the company filed the documents for IPO with a plan to raise $30 billion. Subsequently, the firm revealed that it made a net profit of $2.6 billion in 2019.[28] In October the IPO was priced to raise US$34.5 billion, and value Ant Group at over US$313 billion in the dual Shanghai and Hong Kong listing.[29][30]

In November 2020, the company announced it would be suspending its IPO on both the Shanghai and Hong Kong stock exchanges.[31][32] The Wall Street Journal reported that Chinese paramount leader Xi Jinping personally made the decision to halt the initial public offering of Ant Group.[12]

On 4 December 2020, Ant Group's unit and a consortium comprising Greenland Financial Holdings Group, Linklogis Hong Kong Ltd, and Beijing Co-operative Equity Investment Fund Management, have been selected to receive the digital wholesale bank (DWB) licences in Singapore.[33]

On 26 December 2020, the Ant Group was ordered by the People’s Bank of China to rectify its business and formulate an implementation timetable. The central bank also summoned Ant executives, saying that the Group lacked an effective governance mechanism, defied regulatory compliance requirements and engaged in regulatory arbitrage.[34]

On 15 January 2021, Ant Group announced that it would be overhauling its business structure in accordance with the Chinese central bank and its financial regulators' wishes. State spokesmen announced that the Ant Group's consumer finance branch will be regulated as a financial institution rather than a technology startup.[35]

Expansion outside Asia

Driven by the growing numbers of Chinese tourists around the world, Ant Group has sought to expand its services into Europe and the United States.[36] In Europe, the company had tripled the number of merchants that are accepting the Alipay app, according to the firm's head of Europe division.[36] Partnerships exist between Alipay and various European digital wallet apps, including ePassi (Finland), Vipps (Norway), MOMO (Spain), Pagaqui (Portugal) and Bluecode (Austria).[37]

On 14 February 2019, Ant Group acquired the British international money transfer services provider WorldFirst for $700 million.[38]

In March 2019, UK's Barclaycard expanded an agreement that enabled British retailers to accept the Alipay app in their stores.[39]

By September 2020, it was reported that U.S. authorities are considering restrictions on Ant Group's payment system, with the U.S. State Department recommending that Ant Group be added to the Entity List, but subsequently withdrew plans to sanction the company.[40][41][42]

Services

It operates Alipay, the world's largest mobile and online payments platform [43] as well as Yu’e Bao, formerly the world's largest money-market fund.[44] It also runs Zhima Credit, a third-party credit rating system.[45] As of September 2017, Ant Group unveiled its facial recognition payment technology through its Alipay services.[46]

In September 2018, the company launched the Ant Group Technology brand for all of its technology products and services.[47]

In 2015, Alibaba and Ant Group Services Group created online-to-offline local services company Koubei as a joint venture .[48] Ant Group also operates credit payment company Huabei, and owns a 30% stake in the online bank called MYbank.[5][15][49]

In 2015, Ant Group launched Ant Fortune, a wealth management platform. Yu’e Bao is one of the products on the platform. Ant Fortune offers hundreds of products from more than 80 Chinese fund institutions.[50]

In June 2017, Ant Fortune launched a Fortune Account (财富号) service platform that allows financial institutions to publish content and sell their financial products there.[51]

In October 2018, Ant Group launched the Xianghubao mutual protection plan that attracted 50 million people to sign on in half a year, five times more than the population of New York City. Operating somewhat like a collective, Xiang Hu Bao has no sign-up charges and participants contribute evenly to payouts of as much as 300,000 yuan when a member falls critically ill. Such products may help fill a yawning gap in medical protection for vulnerable populations in China, as the rate of critical illnesses rises.[52]

In September 2019, a product within the Alipay app called Ant Forest received a Champions of the Earth award, the United Nation's highest environmental honor, for turning the green activities of half a billion people into real trees planted in some of China's most arid regions. Users are encouraged to record their low-carbon footprint through daily actions, such as taking public transportation or paying utility bills online. For each move, they receive "green energy" points with which they can exchange for the real trees, which they can view in real time via satellite.[53][54]

Controversies

Connection with Megvii

Ant Group is among the early-stage investors of Megvii, a Beijing-based company known for providing artificial intelligence products to various businesses including Ant itself.[55][56] In May 2019, Human Rights Watch reported finding Megvii's Face++ code in the Integrated Joint Operations Platform (IJOP), a police data system used by Xinjiang authorities for mass surveillance, particularly in relation to the Uyghur community.[57] Human Rights Watch released a correction to its report in June 2019 stating that Megvii did not appear to have collaborated on IJOP, and that the Face++ code in the app was inoperable.[58] The Trump administration later added Megvii to the Bureau of Industry and Security Entity List, accusing it of participating in human rights violations in the Chinese government's campaign against Uyghurs and other ethnic minorities in Xinjiang.[59]

In September 2020, former Google China president and venture capitalist Kai-Fu Lee said in a public speech that Sinovation Ventures had assisted Megvii in obtaining a large amount of private facial data from Ant Group to “analyze how to enter various industries.” Following Lee's speech, Ant Group denied providing Megvii facial data. Lee later said he “misspoke” on the issue.[60][61]

Backlash from regulators

On November 3, 2020, just two days before Ant's $34 billion IPO, Chinese regulators extraordinarily suspended the process. According to Chinese officials and others with knowledge of the process, there was a monthslong "tug of war" between Ant founder Jack Ma and top regulators led by Vice Premier Liu He, who is responsible for the economic and financial policies under Xi Jinping.[62]

On December 20, 2020, The Wall Street Journal reported that Ma had angered Beijing by criticizing Xi Jinping's signature campaign to control financial risks in a speech in October. In a November 2 meeting with the regulators, Ma offered to hand over parts of Ant Group to the Chinese government to salvage his relationship with them. According to people with knowledge of the matter, Ma said to the regulators, "You can take any of the platforms Ant has, as long as the country needs it." Ma's offer did not save the IPO from being suspended.[63]

Sharing consumer data with Chinese government

In January 2021, The Wall Street Journal reported that China's regulators were trying to make Ant share the troves of personal data in its payment and lifestyle app, Alipay, which is used by over a billion people. The data include consumers' spending habits, borrowing behaviors, and payment histories. According to people familiar with the issue, in the past, Jack Ma had resisted the authorities' attempts to grab the data owned by Ant. In late December 2020, China's central bank criticized Ant for its "defiance of regulatory demands" and asked the company to restructure its business.[64]

Subsidiaries
  • Alipay – a mobile wallet app supports make and accept payments.[65]
  • Huabei (Ant Credit Pay) – a virtual credit card type of product that facilitates credit payments
  • MYbank – a private online bank that lives entirely on the cloud
  • Jiebei (Ant Cash Now) – a consumer loan service
  • Ant Fortune – a comprehensive wealth management app
  • Ant Insurance Services
  • Zhima Credit – an independent credit filling and scoring service for individuals
  • ZOLOZ – a global biometric-based identity verification platform

International partners

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