Chinese fintech giant The Ant Group — an affiliate of Alibaba (NYSE:BABA) which has, over the past few years, grown into the PayPal (NASDAQ:PYPL) of Asia — will make its highly anticipated debut on the public markets soon. But not in New York.
The Ant Group IPO, unlike the IPOs of previous Chinese tech giants, will skip a listing in the financial center of the world amid escalating U.S.-China trade tensions.
Instead, The Ant Group will do a dual-listing in both Hong Kong and Shanghai, a first for a Chinese technology company of this ilk.
Does that mean regular retail investors can’t invest in the Ant Group IPO?
Directly, yes. But there are many indirect ways U.S. retail investors can invest in what projects to be one of the biggest and most exciting IPOs of all time.
A Brief Overview of The Ant Group
The Ant Group is the world’s largest fintech company that is essentially the PayPal of Asia.
The company is built around the Alipay online and mobile payments service, which has become a nearly ubiquitous digital payments platform in China. As of late 2019, Alipay had 1.2 billion users, roughly 900 million of whom were from China and the other 300 million of whom were from other Asian markets.
That’s a huge number. For perspective, PayPal has just 325 million active accounts.
Of course, the Alipay business has huge growth prospects over the next several years, as the cashless revolution sweeps across Asia and all transactions become digitized. In that world, Alipay does turn into a ubiquitous payment platform which will handle trillions of dollars worth of transactions every year. Plus, Alipay could expand geographically, into Europe and potentially even North and South America.
Ant Group is Much More Than Just Alipay
Much like U.S. payments platforms such as PayPal and Square (NYSE:SQ) have done, Ant Group has built out a robust ecosystem of fintech services surrounding its core payments platform.
Such services include wealth management, micro-financing, insurance and credit scoring, in addition to payments. Roughly 8 in 10 of the company’s customers use at least three of those services. About 5 in 10 use all five of the services.
In other words, The Ant Group is increasingly turning into an end-to-end, all-in-one fintech ecosystem.
This ecosystem is estimated to have reported revenues of $20 billion last year, up about 40% year-over-year. As the world of payments and finance increasingly becomes digital, that $20 billion will only go up, by a lot.
And the Ant Group’s rumored IPO valuation — about $200 billion valuation, putting it on par with PayPal — will only grow, too.
How to Invest in The Ant Group IPO
As a U.S. retail investor, you cannot directly invest in The Ant Group IPO, because the company won’t list in the U.S.
But you can indirectly invest in The Ant Group IPO.
Such indirect methods include:
- Buying the Renaissance International IPO ETF (NYSEARCA:IPOS), an ETF which invests in international IPOs. More than half of this ETF’s holdings are in China. It is quite likely that the IPOS ETF, then, will gain exposure to The Ant Group IPO. This is your best bet if you’re looking for the most direct exposure to The Ant Group IPO.
- Buying an ETF which tracks the Hong Kong or Shanghai stock market indices. That includes the iShares MSCI Hong Kong ETF (NYSEARCA:EWH) and the iShares MSCI China ETF (NASDAQ:MCHI).
- Buying the Invesco China Technology ETF (NYSEARCA:CQQQ), on the idea that The Ant Group IPO will provide a tailwind for the broader Chinese tech space and create a rising tide which will lift all boats in the sector.
The Ant Group is one of the most exciting and promising technology companies in the world.
Unfortunately, U.S. retail investors won’t be able to directly invest in The Ant Group IPO.
But they can indirectly invest in the IPO, by buying various ETFs which give them diversified exposure to the fintech giant.
So, if you’re interested in investing in The Ant Group IPO, don’t let the foreign listing scare you away. Considering buying IPOS, EWH, MCHI, or CQQQ today.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long SQ.