Online payment services make big IPO waves this year; Global IPO rankings in 2018
The over $5 billion initial public offering in Hong Kong of Xiaomi, the world’s No. 4 smartphone maker, may have made the biggest splash in the global initial public offering market in the first half of the year, but the biggest trend overall was the number of stock flotations by online companies, particularly financial settlement services.
One such company is Adyen of the Netherlands, which came in at No. 14 in an IPO ranking compiled by Dealogic. In January, U.S. auction site eBay surprised industry watchers when it announced plans to switch its main payment processing partner from longtime ally PayPal to the Dutch company from 2020.
Adyen was founded in 2006 and is used by more than 5,000 businesses. It deals in more than 150 currencies. Payment settlement services typically leave tasks such as finding merchant partners and managing relationships with them to specialists. But Adyen takes on that role itself, finding customers among well-known retailers, restaurants and credit card brands. That allows it to cut the fees it charges, which, in turn, attracts more merchants.
Another strong player in online payments is Brazilian company PagSeguro Digital, which came at No. 5 in the IPO ranking. Buyers and sellers in Brazil prefer to avoid dealing in cash for safety reasons. That has sparked demand for digital settlement. PagSeguro’s innovation is to sell processing hardware to merchants at low cost, rather than renting it out, as is typical in the industry.
This allows customers to do business with PagSeguro for between 68 and 778 reals ($16 and $189). It also does away with monthly rental fees, a big plus for small businesses. The service has helped bring credit card payments to even small market stalls in Brazil. Ricardo Dutra, PagSeguro’s CEO, says the company hopes to provide a payments “ecosystem” for small to midsize businesses.
In 17th place was GreenSky, a U.S. company that brings together borrower and lenders in the home-improvement loan market. GreenSky offers online credit screening to prospective borrowers, who provide personal information such as their identity and annual income. The company’s website creates a list of potential lenders, usually regional banks, and the borrower’s credit limit. The borrower then works out a budget with the building contractor.
GreenSky makes its money from fees charged to both banks and building contractors. Since it was founded in 2006, more than 10,000 banks and contractors have registered with the company.
China had the largest share of IPOs by value in January to June. Video streaming service iQiyi came in sixth in the ranking. The service was launched in 2010 by search engine giant Baidu. The biggest attraction of the service, dubbed “China’s Netflix,” is its original dramas and variety shows. It had more than 67 million subscribers as of the end of June.
Ping An Healthcare and Technology, a spinoff from Ping An Insurance, had the 13th-largest IPO during the period. The company is best known for Ping An Good Doctor, a service that lets people consult with the network of about 1,000 registered doctors. Patients can also book hospital appointments and buy medicine through the service. Doctors can tap its medical database to help with consultations. Ping An Good Doctor has more than 200 million users and its registered physicians make about 400,000 diagnoses a day through the service.
“China is the most advanced nation in terms of the AI doctor initiative,” according to SoftBank Group Chairman and CEO Masayoshi Son. The Japanese tech conglomerate holds a stake in Ping An HealthCare through its $100 billion Vision Fund.
The largest IPO in Japan so far this year was that of flea market app Mercari. Coming in at No. 12, it was the only Japanese company to make the Dealogic ranking.