China's Ant Group To Raise $34 Billion In Biggest-Ever IPO

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by Tyler Durden
Monday, Oct 26, 2020 - 08:33 AM

China - which is set to surpass the US as the world's largest economy some time in the next decade if it hasn't done so already - is about to set another record, this time in the capital markets. Jack Ma’s Ant Group is aiming to raise at least $34.4 billion through initial concurrent public offerings in Shanghai and Hong Kong, a "blockbuster" listing that will rank as the world’s biggest share sale ever surpassing Saudi Aramco’s $29 billion IPO last year, and cementing Ant Group's status as one of the most valuable companies in the fintech sector.

The financial technology company, which is controlled by Alibaba’s billionaire founder Jack Ma, priced its Shanghai stock at 68.8 yuan ($10.27) apiece and its Hong Kong shares at HK$80 ($10.32) each, valuing the company at about $280 billion before it makes its market debut on November 5.  Those sums would eclipse the $25 billion raised in 2014 by its former parent Alibaba and the $29.4 billion of shares sold more recently by Saudi Aramco, in what is to date the largest-ever IPO.

Ant could also raise up to a maximum of about $5.2 billion more, if underwriters exercise their option to purchase up to 15% more shares in the overallotment. That would give Ant a valuation of over $320 billion, making it bigger than JPMorgan Chase and four times larger than Goldman Sachs. Mastercard is was worth about $330 billion as of Friday’s close. A private fundraising in 2018 valued Ant at $150 billion.

The company will issue 1.67 billion shares in China, equivalent to 5.5% of the total outstanding before the greenshoe, according to its prospectus on the Shanghai stock exchange. It will issue the same amount for the Hong Kong offering, or about 3.3 billion shares in total. The Hong Kong listing day will be on Nov. 5.

According to Bloomberg, in the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, or over 284 times the IPO offering tranche, according to Ant’s A share offering announcement.

The mammoth IPO adds to an already frenetic year for China’s capital markets, which are enjoying a boom in share sales despite heightened tensions with the U.S. The fintech giant that runs the Alipay platform is charging ahead with its landmark offering just days ahead of the U.S. election. Shares will likely start trading only after the U.S. vote on Nov. 3, an event that could spark market volatility if the vote is disputed or counting delayed.

Ant picked China International Capital Corp. and CSC Financial Co. to lead its Shanghai leg of the IPO. CICC, Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley are heading the Hong Kong offering. Existing Ant shareholders won’t be able to sell shares for six months, according to the filings.

Alibaba Group, which was co-founded by Ma and currently owns about a third of Ant, has agreed to subscribe for 730 million of the Shanghai shares, which will be listed in Shanghai under the ticker “688688,” according to the prospectus. Alibaba will hold about 32% of Ant shares after the IPO, according to Bloomberg.