Interesting article on Ant finance (which to me is a lot like China-equivalent of Paytm).
Key excerpts from the article:
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Ant neither took deposits, nor piled risky loans onto its balance sheet. Nearly all of the short-term credit offered on Alipay, the consumer-facing app that boasts over 700 million domestic users, was securitised or underwritten by third-party banks and partners >> Exactly like Paytm (minus Postpaid)
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If there’s one thing that makes regulators nervous – for good reason – it’s rapid growth in new areas of finance that they don’t directly oversee. From now on, the Ant must fund 30% of the loans it makes with partners, and those banks can’t originate more than half of their total loans through online companies >> Led to reduction of loan balance by 75%
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On a multiple of 11 times forecast 2023 earnings – between where mid-sized Chinese banks and technology hotshots trade – and Ant today is worth perhaps just over $55 billion >> Its IPO was planned at US$ 300B
Takeaways for me:
- In the short run, Paytm is likely to see massive momentum due to lending (we are already seeing this)
- In the long term, the regulator will have the final say.
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