|Jack Ma’s Ant Group Produces $3.5 Billion Profit in Six Months as IPO Looms|
Results show how lucrative the Chinese financial-technology giant’s business has been as it gears up for blockbuster offering
By Stella Yifan Xie
Wall Street Journal
Aug. 20, 2020 12:03 pm ET
HONG KONG—Ant Group Co., the Chinese financial-technology giant backed by billionaire Jack Ma, earned roughly $3.5 billion over a recent six-month period, showing how lucrative the company’s business has been as it gears up for a blockbuster initial public offering.
Financial results released Thursday by Alibaba Group Holding Ltd., BABA 3.04% which owns a 33% stake in Ant, showed that the soon-to-be-listed company posted a profit of about 9.2 billion yuan ($1.3 billion) in the three months to March, and around 15.5 billion yuan ($2.2 billion) in the quarter ended December 2019.
Ant owns Alipay, a highly popular mobile-payments network that is used by more than 900 million people in China to spend money online and in physical stores, pay bills, take public transportation, and make big-ticket purchases. The company also provides a range of financial services to millions of businesses in the country. It supplies technology to financial institutions and other organizations, and sells financial products including mutual funds and insurance policies to scores of individuals.
The Hangzhou-based company, which was valued at $150 billion in a private fundraising round in June 2018, said last month that it is planning concurrent initial public offerings on stock exchanges in Hong Kong and Shanghai. The combined offerings could be among the largest in history, and would take place roughly six years after Alibaba’s own record-setting $25 billion IPO in New York.
Alibaba, which last year added a second listing in Hong Kong, reports financial results using U.S. generally accepted accounting principles, so its profit figures for Ant could differ from the results that Ant will disclose in its coming listing prospectus.
Ant is aiming for a market capitalization of more than $200 billion when it goes public, The Wall Street Journal previously reported. That would make it more valuable than Goldman Sachs Group Inc. and place it close to PayPal Inc., whose market capitalization was recently above $220 billion following a big share-price run-up this year.
The first quarter is usually a seasonally weaker period for Ant as business activity slows down around the country’s Chinese Lunar New Year holiday.
The three months to March 2020 included weeks in which many cities in China were under lockdowns to stop the spread of the coronavirus across the country. During this period, many restaurants and businesses were closed and people were largely confined to their homes, and curbed spending as a result.
Still, Ant’s first-quarter profit was more than 500% higher than the same period a year ago, according to Alibaba’s filings. The companies didn’t provide reasons for the year-over-year surge.