Alibaba's Ant Financial Raises Hope For Nigerian Fintech Startups

Alibaba Group's financial technology (Fintech) service, Ant Financial Services Group, is planning to go public as it begins the process of Initial Public Offering (IPO). Ant Financial intends to start trading on Hong Kong Stock Exchange and Shanghai Stock Exchange’s STAR board, giving Nigerian fintech founders a boost in their quest to compete against banks in the financial space in Nigeria.

Ant Financial was created in 2014, and six years after, the fintech giant operating in Asia will now become a publicly-traded company like its parent company, Alibaba Group. The IPO is expected to catalyse Ant Financial in the fintech space by attracting investments that will enable the company to improve on its technology and innovations.

What Ant Financial Said About IPO

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While speaking on the planned IPO, Ant Group’s Executive Chairman, Eric Jing, said, "The innovative measures implemented by SSE STAR market and the SEHK have opened the doors for global investors to access leading-edge technology companies from the most dynamic economies in the world and for those companies to have greater access to the capital markets. We are thrilled to have the opportunity to play a part in this development.

“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders, and regulators. Through our commitment to serving the under-served, we make it possible for the whole of society to share our growth.” Jing said in the company's statement.

What You Need To Know

Note that Ant Financial Group is the umbrella body of Alipay, the payment system used for the e-commerce platform of Alibaba Group's Ali Express. About 58% of China, according to Credit Suisse, uses Alipay for their e-commerce activities, making the fintech a market leader in the country and region, considering the population of China.

Aside from its recent push for cash infusion through the IPO, Ant Financial had raised $4.5 billion from the likes of China Development Bank Capital, Primavera Capital Group, and China Investment Corp, etc. After the fundraising, Ant Financial made some acquisitions, one of which included EyeVerify Inc in 2016.

How Does This Affect Nigerian Fintechs?

The fintech space in Nigeria has been growing exponentially within the last few years, with Nigerian fintech companies attracting significant investment from mostly foreign investors. There are several payment solutions, Paga, Paystack, Opay and many others, in the fintech market in Nigeria competing for the lion share of the domestic market.

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Nigeria's tech industry as a whole has been leading the race in Africa. In 2019, fundraising recorded 79.2% Year over Year (YoY) increase in Africa. Tech startups in Africa recorded $1.34 billion in 2019, a significant growth when compared to the $725.6 million the African tech market raised in 2018, and the $203 million raised three years ago. In 2019, out of the $1.34 billion raised, Nigerian tech startups accounted for the largest fundraising on the continent.

Nigerian tech startups raised $663.24 million; this means Nigeria accounted for 50.5% of the total funding raised on the continent, according to WeeTracker. And the majority of the deals involved foreign investors. While most Nigerian fintech companies are still in the startup level and yet to capture as much as Alipay or Ant Financial, they have prospect of developing into the Asian giant's level.

This is considering Nigeria's population and lack of tech solutions in rural areas that have been underserved or underbanked for years. The new milestone of Ant Financial will be a moral booster for the Nigerian counterparts that are operating in a more complex business environment where policies are not necessarily business-friendly or aid growth. Ant Financial has proved the stock market is not made only for traditional conglomerate companies - So, one day, these Nigerian fintech companies can also trade on the Nigerian Stock Exchange (NSE).