Ant Group plans dual IPOs in Shanghai, Hong Kong, bypassing New York

21 Jul, 2020 03:31
source: Singularity Financial

Singularity Financial Hong Kong July 21, 2020 – Jack Ma’s Ant Group, valued at US$200 billion, to kick start concurrent IPOs in Shanghai and Hong Kong, bypassing New York (Source:  South China Morning Post)

Ant Group Co., the Chinese technology and financial-services giant that owns popular mobile-payments network Alipay, said it is planning initial public offerings in Hong Kong Stock Exchange and Shanghai STAR Board, bypassing New York as it seeks to accelerate its growth in China and abroad.

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.

Ant Group, previously known as Ant Financial, is an affiliate of Alibaba Group Holding.  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.

In order to compete more effectively with New York, Hong Kong made listing on its stock exchange more attractive to tech giants by embracing companies with weighted voting rights in 2018. Chinese regulators, on the other hand, launched Shanghai’s Nasdaq-style Star Market last year with more market-driven pricing than its other domestic exchanges.

“The innovative measures implemented by the Shanghai Star Market and the stock exchange of Hong Kong have opened the door for global investors to access leading-edge technology companies from the most dynamic economies in the world, and for those companies to have access to the capital markets,” Ant’s executive chairman Eric Jing said in a press release on Monday.

A concurrent listing on the two exchanges will help Ant fund its goal of digitising the service industry in China and driving domestic demand, as well as position the company to develop global markets with partners and expand investment in technology and innovation, it said.

Ant’s Series C round of fundraising in June 2018 priced the company at roughly US$150 billion, but valuations by Wall Street analysts have climbed since then, in lockstep with its contribution to Alibaba’s earnings.

Most stock analysts agree that Alipay’s closest peer and arch-rival is the financial arm of Tencent’s flagship social media platform WeChat which has a similar profile in terms of size and growth.

Alipay and WeChat Pay enjoy a duopoly in China’s US$8.3 trillion mobile payments market. The two players had an aggregate market share of about 90 per cent of third-party mobile payments in China at the end of last year.