Alibaba’s Ant Group Looks to Raise Record $34.4 Billion in IPO as Investors Line Up
Ant Group is poised to raise up to $34.4 billion (roughly Rs. 2,54,100 crores) in the world’s largest stock market debut as investors rush to buy into the fast-growing Chinese fintech giant despite risks of greater scrutiny at home and abroad.
The dual listing, a first for Shanghai’s Nasdaq-style STAR Market and Hong Kong, would value Ant at about $312 billion (roughly Rs. 23,02,950 crores) before a so-called greenshoe option for a 15 percent overallotment of shares.
At that valuation, Ant is worth more than Industrial and Commercial Bank of China, the world’s biggest bank by assets. The money raised will also shatter the record set by oil major Saudi Arabian Oil (Saudi Aramco) with its $29.4 billion (roughly Rs. 2,17,016 crores) listing last December.
Ant’s looming market debut had been clouded by concerns over growing regulatory scrutiny at home for its lucrative consumer credit business as well as a US State Department proposal to add the company to a trade blacklist.
Global investors, however, have largely shrugged off those concerns as they bet on continued rapid growth of a group that also operates China’s biggest mobile payments platform and distributes wealth management and insurance products.
“The fear of missing out and the lack of other opportunities of this calibre” was spurring investor interest in the IPO, said Justin Tang, head of Asian research at investment adviser United First Partners in Singapore.
Ant’s order books on the Hong Kong offering to institutional investors was oversubscribed one hour after the launch, two people with direct knowledge of the matter said.
Many prospective investors placed orders worth at least $1 billion (roughly Rs. 7,380 crores) in the first hour, said one of the sources, adding that the number of the institutional orders could reach about 1,000.
Ant declined to comment on investor demand.
Headquartered in the Chinese city of Hangzhou, Ant is aiming to raise about $17.2 billion (roughly Rs. 1,26,940 crores) in Shanghai and roughly the same in Hong Kong.
The group has earmarked 80 percent of its domestic offering to 29 strategic investors that will be locked up for at least one year. A wholly-owned unit of Alibaba has agreed to purchase 44 percent of the Shanghai float.
Other strategic investors in the Shanghai float include China’s National Council for Social Security Fund, a unit of Singapore state investor Temasek, as well as Singaporean and Abu Dhabi sovereign wealth funds GIC and Abu Dhabi Investment Authority.
Large Chinese insurers and mutual funds will also have shares allocated via the strategic investor route, Monday’s filing showed.
Ant shares are expected to start trading in Hong Kong and Shanghai on November 5, two days after the US election.
The company set the price tag for the Shanghai leg of the listing at CNY 68.8 (roughly Rs. 800) per share and HKD 80 (roughly Rs. 800) per share for the Hong Kong tranche, the exchange filings showed.
The price represents a multiple of 31.4 times Ant’s 2021 earnings and 24.2 times its 2022 earnings forecast, said a source with direct knowledge of the matter.
By comparison, Alibaba is trading at 34.28 times trailing 12-month earnings in Hong Kong.
Ant declined to comment on the price multiples.
The group’s China listing would eclipse the record set there previously by Agricultural Bank of China’s $10.1 billion (roughly Rs. 74,515 crores) float in 2010. The record in Hong Kong was set by insurance major AIA’s $20.5 billion (roughly Rs. 1,51,189 crores) offering in 2010.
The bookbuilding for the Hong Kong leg will run from Monday to Friday, while books for the Shanghai leg open for one day on Thursday.
Ant’s IPO would also serve to burnish STAR’s status.
Companies raised $22.5 billion (roughly Rs. 1,65,940 crores) via IPOs and secondary listings on STAR between the start of the year and mid-October, making it the third-biggest stock market behind Nasdaq and Hong Kong, Refinitiv data shows.
© Thomson Reuters 2020
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