Jack Ma’s Ant Group chooses Hong Kong and Shanghai for its Mega IPO

One of China’s biggest tech firms has chosen to stay home for its blockbuster IPO, shunning Wall Street where Chinese companies are facing heightened Scrutiny because of rising geopolitical tensions.

Ant Group announced on Monday that it is planning “a concurrent initial public offering” in Hong Kong and on Shanghai’s Star Market, China’s answer to the Nasdaq extending a series of mega tech listings amid the fallout in US-China trade relations.

Ant Group, previously known as Ant Financial, is an affiliate of Alibaba Group Holding, the owner of the South China Morning Post.

Ant is affiliated with E-commerce giant Alibaba, which raised a record $25 billion when it debuted on Wall Street in 2014 still the world’s second largest IPO to date. Ant owns Alipay, one of the most popular payment apps in China, and also offers online financial services such as loans, investments and credit scoring systems.

While the provider of the Alipay service is still discussing the size and timing of the share sale, the outcome is likely to be one of the largest initial public offerings in years. Stock analysts are valuing Ant at more than US$200 billion, higher than state-owned China Construction Bank and just shy of Bank of America’s market capitalisation.

Alibaba received a 33 per cent equity interest in Ant Financial in September last year under a restructuring that also ended a profit-sharing arrangement between them, according to its prospectus in November. While Alibaba does not control Ant Group, its co-founder and China’s richest man Jack Ma effectively controls about 50 per cent of the voting interest in Ant Group, according to its annual report.

The public listing will enable Ant, which operates the Alipay wallet used across Alibaba’s e-commerce networks, to work toward several goals: digitize China’s service industry, such as getting mom and pop shops in far-flung regions to use its payments service; drive domestic demands, such as being a conduit of government-issued coupons for consumers amid coronavirus pandemic; expand globally through its e-wallet partners in nine countries; and finally, invest in new technologies.

Bankers are valuing Ant at a staggering $200 billion, according to sources from Reuters. The company declined to comment on its valuation. If Ant sells 10% of the company in the IPO, it would generate $20 billion in proceeds, which would place it third in terms of the largest IPO deals ever, just behind Alibaba’s $22 billion IPO and Saudi Aramco’s $25 billion IPO.

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