Company / Analytics

Analytics, 28 October 2020

When Ant Group is going on IPO?

Ant Group, the Chinese financial services company controlled by Alibaba founder Jack Ma will raise more than $34 billion in what is likely the world’s largest IPO, in a deal that is already oversubscribed. The company has finally announced the date on which the stock will list jointly in Hong Kong and Shanghai exchanges, raising about $17.23 billion for each market, according to regulatory filings. Our latest analysis provides insights into the IPO and the company.

What is Ant Group?

Ant Group, formerly known as Ant Financial and Alipay, is an affiliate company of the Chinese Alibaba Group. Ant Group is the world’s highest-valued FinTech company, and most valuable unicorn company, with a target valuation of US$280 billion. The company was founded by Alibaba founder Jack Ma.

Alipay is the world’s largest platform for mobile and online payments. Originally launched in 2004, it helped pioneer digital commerce in China and today serves about 1.3 billion users globally, the company said in regulatory filings. The firm was spun out of Alibaba in 2011.

The IPO

Ant Group is seeking to raise about $34.5 billion in what will make it the world’s most valuable financial company. This will be the largest IPO since that of oil giant Saudi Aramco which raised about $30 billion in 2019. Saudi Aramco’s IPO topped another previous record set by Alibaba Group five years earlier.

Following the IPO, Ant Group will have a market valuation of about $315 billion, bigger than JP Morgan Chase (the largest bank in the US) and more than the GPD of Egypt and Finland. The IPO will also lift founder Jack Ma’s fortune to $71.6 billion, making him the world’s 11th-richest person on the Bloomberg Billionaires Index.

How much will shares trade?

Ant Group will list initial public offering (IPO) shares jointly on both the Hong Kon Stock Exchange and the Shanghai Stock Exchange.

Shares on the Hong Kong Stock Exchange will be priced at HK$80 ($10.32), and shares on Shanghai’s tech-oriented STAR Market exchange at 68.8 yuan ($10.27). Trading in Hong Kong is expected to begin on November 5. The Shanghai trading date has not yet been disclosed.

According to Bloomberg, Ant Group’s order book could close on Wednesday, a day early. Already, the IPO is oversubscribed due to significant interest. The IPO is already oversubscribed, and the company is planning to stop taking investor orders for the Hong Kong leg of its initial public offering a day earlier than scheduled.

The sale has received significant interest in demand so great that the Hangzhou-based firm is set to close the institutional investor order book on Wednesday, according to a Bloomberg report.

The company had initially planned to close the Hong Kong book at 5:00 pm on Thursday for each region globally. The new move would bring the closing in line with the Shanghai leg.

It’s not surprising that the IPO is oversubscribed as it has attracted interest from some of the world’s biggest money managers, and a frenzy among individual investors in China. According to Ant’s Shanghai offering announcement, institutional investors alone have subscribed over 76 billion shares, more than 284 times the initial offline offering tranche.

Brokers in Hong Kong are confident the IPO will go smoothly that they’re offering to lend individual investors credit worth 20 times their investment so they could load up on the shares. The company may raise another $5.17 billion if it exercises the option to sell additional shares to meet demand, known as the greenshoe.

Ant will trade under the ticker symbol 688688 in Shanghai and 6688 in Hong Kong, in keeping with Ma’s fondness for the number eight, which is often associated with wealth in China. Ma’s Alibaba Group Holding Ltd., which owns about a third of Ant, trades under the ticker 9988 in Hong Kong.

What analysts are saying?

The fintech giant is charging ahead with its landmark offering just days ahead of the U.S. election. The Hong Kong trading debut will be on Nov. 5., only two days after the U.S. vote, an event that could spark market volatility if the vote is disputed or counting delayed, according to Bloomberg.

Who is leading the deal?

China International Capital Corp (CICC) and CSC Financial Co. will lead the Shanghai leg of the IPO while CICC, Citigroup, JPMorgan. and Morgan Stanley will lead the Hong Kong offering. Existing Ant shareholders won’t be able to sell shares for six months, according to the filings. The banks leading the deal could reap a nice windfall of up to $396 million, according to Bloomberg calculations.

The IPO reflects Asia’s growing economic clout since the region, together with the Middle East has produced 5 of the world’s 10 largest IPO’s.

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