Financial assumptions: 

At a glance, the Ant Group has over 1 billion users conducting digital payment transactions
worth $18 trillion in Mainland China alone and consistently generating an operating profit in
excess of $2 billion (Skinner, 2021). The company has two main revenue streams: digital
payment services and digital finance technology platforms. Together these two streams
accumulate 99% of the company’s revenues (JP, 2020) (Appendix 1). Historically, the digital
payments segment has generated greater revenue as compared to the digital finance platforms but
due to deliberate efforts, the latter now generates the lion’s share of the revenue (Bary, 2020)
(Appendix 2). The company hooks the customers into their ecosystem using the digital payments
services and then sell lucrative high margin products of the digital finance technology platforms
yielding margins as high as 30% in some cases (Skinner, 2021). Therefore, it can be forecasted
that the company’s profits are likely to grow exponentially as they integrate more customers into
their digital finance platform rather than simply using its digital payment services.

Another major source of an increase in future revenues is going to come from international
markets as the company generates 94% of its revenues from Mainland China alone despite its
presence in 200 countries (AntGroup, 2020) (Appendix 3). If Ant Group comes at par with other
global competitors such as PayPal who have a 53% dependence on its home country (Dazeinfo,
2020) (Appendix 4), then AntGroup can increase its revenues by 78% making it a very attractive
investment today. The most attractive potential market for Ant Group is the EU cross border e-
commerce market which is worth 146 billion euros and is relatively more welcoming towards
Chinese firms as opposed to the United States (E-commerce News, 2021).

The enterprise future trajectory: 

As per Ant Group’s expectations, it is estimated that the company will receive a net of $17
billion from their IPO assuming a price of HK$80 per H Share (AntGroup, 2020). Out of the $17
billion, $13.6 billion are intended to be used for research and development, and for enhancing
cross-border payment capabilities for partners beyond China (JP, 2020) (Appendix 5).

In terms of research and development, the company aims to further invest in product and service
innovation that can differentiate its offerings from its competitors (AntGroup, 2020).
Furthermore, the company wants to explore the commercial applications and use cases of
AntChain, a blockchain-based product that can potentially revolutionize the current industry
(Lan, 2020).

Cross-border expansion is another major investment area for the company. Currently, the
company generates 94% of its revenue from Mainland China alone and is potentially missing out
on significant market share from other regions (AntGroup, 2020). With an investment of $13.6
billion, the company aims to improve its international payment infrastructure and offer a greater
range of services such as currency exchange, duty-free shopping and tax rebates (JP, 2020).
Furthermore, it aims to collaborate with Alibaba's existing customers and integrate them into Ant
Group’s ecosystem by broadening the coverage of their international payment connections (Bary,
2020).
Appendices:

Appendix 1

Appendix 2
Appendix 3

Appendix 4
Appendix 5
 References
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Available at:
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Bary, E., 2020. Ant Group IPO: Five things to know about the Alibaba affiliate ahead of the
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Dazeinfo, 2020. PayPal Annual Revenue by Region: FY 2012 - 2019. [Online]

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