Alibaba's (BABA  ) Ant Group, previously known as Ant Financial, is planning to go public next week at a valuation of $250 billion and hopes to raise $35 billion. This would top Saudi Aramco's IPO which raised $29 billion earlier this year.

This valuation would make Ant worth more than nearly every financial or fintech stock currently listed in the United States other than JPMorgan (JPM  ), Visa (V  ), or Mastercard (MA  ).

Given the recent strength in the IPO market for fast-growing tech stocks and the massive gains in fintech stocks, it wouldn't be surprising to see its IPO oversubscribed.

Origin Story

Ant Group is a fintech juggernaut that has a dominant position in Asian markets in online banking, digital payments, and e-commerce payment processing.

The company was spun out of Alibaba and it was actually started as a solution to Alibaba's problem. As Alibaba was growing its business to business and business to consumer online marketplaces, its growth was stymied by the lack of payment infrastructure. Alibaba understood that its product could only take off and achieve scale if buyers and sellers had a trusted third-party to handle payments.

From these beginnings, it's continually evolved to become a one-stop financial portal that provides a full-scale solution to a company and individual's financial needs including investing, wealth management, insurance, lending, etc. The payments product is basically a funnel that brings users into eventually using Ant's more higher-value, higher-margin products and services. This makes Ant an amalgam of an insurer, broker, bank, and fintech company.

Impressive Growth

Ant Group's growth has been phenomenal. It's not inconceivable that over the next decade, it passes Alibaba in market value. Currently, Alibaba holds a 33% stake in Ant.

Another impressive stat about Ant Group is that it handles more payment volume than Visa (V  ) and Mastercard (MA  ) combined. Combined, these giants handle $16 trillion, while Ant handled $18 billion in 2019. And, Ant is growing at a much faster rate than these companies.

Financials

Ant Group generated $17.7 billion in revenue in 2019 which was a nearly 50% increase from the previous year. Most of the revenue came from digital payments, while credit, insurance, and investing accounted for the remainder. It posted a $3.4 billion profit in 2019.

It's four times as big as its biggest rival in terms of payments - TenCent (TCEHY  ). Ant Group has a dominant position in payments. This business benefits from network effects since, it's more likely that people will join a payments network if people are on it. Once people are on its platform, it engages with users and will have opportunities to sell them on more products.