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Jack Ma’s Ant Set to Raise $35 Billion in Biggest-Ever IPO
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Ant’s IPO Runs Low on Time to Avoid U.S. Election Turbulence
(Bloomberg) -- Jack Ma’s Ant Group has a narrow window to make its much-anticipated market debut ahead of U.S. election turbulence. Now its bankers must grapple with any potential delays stemming from a debate in Washington over restrictions on the payments behemoth.Discussions over how and whether to restrict Ant -- as well as Tencent Holdings Ltd.’s payments systems -- have accelerated among senior U.S. officials in recent weeks though a decision isn’t imminent, Bloomberg reported.They come as Ant is expected to raise about $35 billion from simultaneous initial public offerings in Shanghai and Hong Kong as early as this month. China’s biggest payments company already has approval for its mainland listing, but is waiting for a hearing with the Hong Kong stock exchange. That green light would need to come roughly by the middle of October if Ant aims to beat the U.S. presidential vote on Nov. 3.The Hong Kong hearing before a 28-member panel of external professionals was expected last week but has yet to happen. If it’s delayed much further, the IPO risks straddling the U.S. election where some expect a surge in postal ballots to create a prolonged period of uncertainty. The one-week gap in Hong Kong between the pricing of an IPO and the start of trading means investors would be left exposed to an increase in market volatility.Ant is said to be targeting a valuation of $250 billion, which would make it one of the world’s most valuable financial firms ahead of Bank of America Corp. Its attraction rests on its reach into the pockets of more than 700 million monthly users, most of whom are in China where the ubiquitous Alipay app offers everything from loans and travel services to food delivery. Still, potential U.S. restrictions would raise questions about Ant’s overseas ambitions and could hurt its relationships with American firms.“Ant’s business is mostly in China and is self-sufficient,” said Ram Parameswaran, founder of San Francisco-based Octahedron Capital Management, which owns shares in Ant’s affiliate Alibaba Group Holding Ltd. and plans to invest in the IPO. “It is highly unlikely that U.S financial institutions will be banned from doing business with Ant.”Ant declined to comment in an emailed statement.Potential options the Trump administration could consider range from a U.S. ban to the far more damaging possibility of putting Ant on a specially designated national list, which would turn one of China’s crown jewels radioactive for any U.S. company.Its guideline for Tencent’s instant-messaging app WeChat could offer clues to how the U.S. might handle the payment platforms. It has allowed U.S. companies to continue working with WeChat outside of the U.S.Institutional investors in America will have less of an impact on the demand-supply equation with Ant as the listings are focused on Hong Kong and Shanghai, Parameswaran said.Singapore’s sovereign wealth fund GIC Pte plans to invest more than $1 billion in Ant shares, according to people familiar with the matter. State investor Temasek Holdings Pte, China’s $318 billion National Council for Social Security Fund and Saudi Arabia’s Public Investment Fund are among those who’ve been reported to be weighing investments.Early feedback prompted Ant to decide against locking in cornerstone investors for the Hong Kong leg, confident there would be plenty of takers, people familiar have said.“There is great demand from clients and global asset managers,” said Joel Ng, an analyst at KGI Securities (Singapore) Pte. “Most of Ant’s business is in China and the rest of Asia so U.S. restrictions will not be a huge deal.”According to Ant’s IPO prospectus, it gets less than 5% of its revenue from outside China. And only a tiny portion of that is from the U.S., a person familiar has said. Even so, a ban on Ant doing business in the U.S. could curb the potential for growth in the future.Alipay has also become a less dominant part of Ant’s business in recent years, accounting for just 36% of its revenue in the first half of this year. Its single biggest revenue maker is now its micro-lending platforms. With a dominant position in China, Ant has been spreading its reach into the rest of Asia, where it is working with digital payment providers in India and Thailand as well as peddling its expertise in wealth management and risk controls.“The domestic market is quite penetrated already by Ant and WeChat Pay, so the future growth is going to have to come through international expansion,” said Martin Chorzempa, research fellow at the Peterson Institute for International Economics. “The key question for a Chinese fintech is whether it can expand internationally.”(Adds details on revenue in 15th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Jack Ma’s Ant Set to Raise $35 Billion in Biggest-Ever IPO
(Bloomberg) -- Jack Ma’s Ant Group Co. is set to raise about $34.5 billion through initial public offerings in Shanghai and Hong Kong, a blockbuster listing that will rank as the biggest IPO ever and make it one of the most valuable finance firms on the planet.The fintech giant will have a market value of about $315 billion based on filings Monday, about the same valuation as JPMorgan Chase & Co. and four times larger than Goldman Sachs Group Inc. The sale vaults Ma’s fortune above the Walmart Inc. heirs.The IPO is attracting interest from some of the world’s biggest money managers, and sparking a frenzy among individual investors in China clamoring for a piece of the sale. In the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, more than 284 times the initial offline offering tranche, according to Ant’s Shanghai offering announcement.“This was the first time such a big listing, the largest in human history, was priced outside New York City,” billionaire founder Ma told the Bund Summit in Shanghai Saturday. “We wouldn’t have dared to think about it five years, or even three years ago.”The strong demand puts the much-anticipated IPO on track to surpass Saudi Aramco’s $29 billion sale last year. Ant priced its Shanghai stock at 68.8 yuan ($10.27) apiece and its Hong Kong shares at HK$80 ($10.32) each. The company may raise another $5.17 billion if it exercises the option to sell additional shares to meet demand, known as the greenshoe.This is “a homecoming for capital markets in Shanghai and Hong Kong,” said John Ho, founder of Janchor Partners. Ho, who invested $400 million in Ant two years ago, added that he’s trying to secure a bigger allocation of the Hong Kong shares and that being able to invest in Ant “is priceless.”T. Rowe Price Group Inc., UBS Asset Management and FMR LLC, the parent of Fidelity Investments, are among the money managers angling for a piece of the deal, a person familiar with the matter has said. Hong Kong stockbrokers are so confident Ant IPO will go smoothly that they’re offering to let mom-and-pop investors buy the stock with as much as 20 times leverage.“The investment thesis of Ant is a systemic valuation transfer from mainstream Chinese financial institutions such as banks to a platform that’s data-driven, with a huge network effect, and enjoying almost zero marginal costs of cross-selling,” said Nick Xiao, CEO of Hywin International, the Hong Kong arm of Hywin Wealth that’s helping rich individuals buy shares of Ant. “Every bank and securities house and fund manager will have to plug into it, while every consumer, corporate or individual, cannot live without it.”The fintech giant that runs the Alipay platform 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.Ant has picked China International Capital Corp. and CSC Financial Co. to lead its Shanghai leg of the IPO. CICC, Citigroup Inc., JPMorgan. 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.The company will issue no more than 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.Alibaba Group Holding Ltd., 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.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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