It is the Hormiga Group, which, with more than 1 billion active users on its Alipay platform and an estimated market value of 316,000 million dollars, has become the largest business conglomerate of finance and digital commerce in China.

Founded in 2004, the Hormiga Group has achieved in these years a price estimated at JP Morgan, the largest bank in the world.

This giant ant seems far from wanting to stop and in the coming weeks it will carry out what, predictably, will be the largest IPO in history, although its initial plan was altered on November 3 by the decision of the Chinese authorities to suspend the sale of its shares.

Grupo Hormiga has already revolutionized the use of money and transactions in China, becoming the first means of digital payment in a country traditionally attached to the use of cash, and many analysts believe that with its huge offering of shares it seeks to take the first step towards its international expansion.

How it all started

Now more than 80 million suppliers offer their products through some of the group's services, but the pillars of that success were established years ago.

The businessman Jack Ma had created Alibaba, a digital commerce platform, but he was faced with the problem of the lack of means and payment guarantees in a country where very few had access to credit cards and many merchants were not willing to send your products to the buyer if he did not pay in advance.

So Ma created Alipay, the embryo of Grupo Hormiga, a digital trust service that held the price of the purchased item until it reached the buyer's home and then delivered it to the seller.

"Alipay solved the problems of how underdeveloped financial services were in China," Martin Chorzempa, a researcher at the Peterson Institute for International Economics, told BBC Mundo.

"E-commerce was difficult at first because few people had credit cards. Most banks were state-owned and focused more on serving other state-owned companies than private consumers.

"This meant that many small savers did not have access to credit or financing products. Ma declared in 2008: "If the banks don't change, we will change the banks."

This is what his Grupo Hormiga seems to have achieved in these years.

Over time, its services have diversified and today it sells millions of credits through its platform. The user receives the response to his request in a few minutes on his smartphone.

Ant charges those who apply for the loan a lower interest than traditional banks offer, which are actually the ones who grant the loans.

The structure of banks makes small loans not a business for them, since they spend more on researching the creditworthiness of the client and on all the paperwork than they would ultimately get from the operation. There, Grupo Hormiga found one of its veins.

Entities pay you a commission for bringing them clients and for something much more valuable: information about your solvency and risk profile.

"A company like this, with hundreds of millions of users and a ton of information about them, can play a key role, as it can assess risk from anyone in a way that banks cannot," Chorzempa says. Everything, in a faster and cheaper way than a traditional bank.

Users buy, pay and request credits through the platform, which allows Grupo Hormiga to access personal and financial information that is beyond traditional banking and makes it easier to forecast the solvency of a client.

In the words of Chorzempa: "Hormiga applied technology to these problems and managed to break the barriers of the financial institutions existing then to open the market.

This also allowed it to offer insurance policies (570 million between June 2019 and June 2020) and investment products to small savers hitherto neglected by Chinese banks.

One of its most popular services is Yu e Bao (the Surplus Treasury, in Spanish), with which anyone can become an investor from the equivalent of US $ 0.15 and get their money back at any time with just a few clicks on their telephone.

Strategies like this allowed him to attract a crowd of low-income workers and Chinese small business owners.

Grupo Hormiga knows who they are, where they live, how much they earn, how much they owe and what they like to spend their money on. That is why it is worth so much now.

Where the anti s going

The rise of this business colossus reflects that of digital commerce in China and its large "fintech" companies, as financial technology companies have been baptized in the Anglo-Saxon world.

And it seems that the golden age will last a long time.

In a report prepared before its imminent IPO, the financial consultancy Morning Star indicated that Grupo Hormiga will retain its leadership position in the market for at least the next 20 years and noted that the growth of internet use and electronic payments in China, today still below the developed countries, they will continue to increase in the coming years. With them, so will Ant's business.

When companies decide to go public, they usually do so in search of capital with which to undertake new projects, such as the development of new technologies or expansion plans. The unprecedented magnitude of Grupo Hormiga's IPO leads many analysts to believe that the colossus plans to expand its networks into western markets, which have so far resisted penetration by Chinese financial technology giants.

Alipay is accepted as a means of payment in many parts of the world because it is what Chinese tourists use, but no platform has managed to attract many Western users.

Zennon Kapron, founder of the consulting firm Kapronasia, states that "in the business world, there has been talk for a long time that Grupo Hormiga would go public; it is a natural step, because the Chinese market is very competitive, with other strong platforms, like Wechat, from Tencent, but they are probably also looking for capital with which they can be more aggressive in their international expansion. "

If Grupo Hormiga embarks on this adventure, it will have to overcome important obstacles.

Chorzempa predicts that Grupo Hormiga "would not have so much space in Western countries because there is not much room for improvement for the financial sector. In the United States, many people have a credit card and can use it without major difficulties."

It also doesn't help that many Western leaders may be wary of a Chinese company capable of accessing the personal and financial data of hundreds of thousands of Europeans or Americans, as recent problems with the Tik Tok app in the United States have shown. where President Donald Trump follows a policy increasingly hostile to big Chinese companies.

In fact, Ant has already seen some of his plans thwarted in the past. In 2018, the US authorities prevented him from taking over remittance giant Moneygram.

Thus, it is not surprising that, while Alibaba chose New York as the setting for its IPO in 2014, Hormiga's shares will now only go on sale in Beijing, Shanghai and Hong Kong. "The climate has changed a lot since then," says Chorzempa.

It is not clear if Ant or Chinese competitors like Tencent will eventually prevail in the West, but they have already set a trend that many experts see unstoppable.

Chorzempa concludes that "the Chinese 'fintech' model, which brings together digital commerce, social networks and financial services, is extremely powerful, and Western banking is endangered by ignoring it."

"There are difficulties that lead to doubts that they will end up dominating global financial services, but the fact that Facebook and other technology companies are trying to emulate them reveals that theirs is the model of the future."

bbc.com