Ant Group’s mega IPO receive final nod from Chinese regulator

By Rahul Vaimal, Associate Editor
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Chinese FinTech company Ant Group has received the final approval from the country’s top securities watchdog for the registration of its Shanghai offering and has cleared the last regulatory barrier for its  $35 billion dual-listing.

Ant, the world’s most valuable unicorn supported by Chinese eCommerce giant Alibaba Group Holding plans to list simultaneously in Hong Kong and Shanghai in the coming weeks, sources reported.

The Chinese firm’s listing will mark the world’s largest initial public offering, breaking Saudi Aramco’s $29.4 billion float record from December 2019. The IPO will also be the first simultaneous listing in Hong Kong and the STAR Market in Shanghai.

As per the reports, Ant Group is preparing to host a  price consultation for the Shanghai offering on October 23 and will set the price on October 26.

The share offering will be equally split between the Hong Kong and Shanghai exchanges, selling up to 1.67 billion, which will show up to 11 percent of its expanded share capital, before a 15 percent over-allotment option is done, the prospectus cited.

Strategic investors like Zhejiang Tmall Technology, a unit of Alibaba, which has applied to purchase 730 million shares in Ant’s STAR IPO will be locked up for at least 12 months and will account for 80 percent of the domestic float. 

The IPO plan comes following the China Securities Regulatory Commission accepting the registration of Ant’s domestic float on the Nasdaq-style STAR Market, as part of the local rules and the preliminary prospectus was filed in August.

The Ant group has announced that the revenue from sales will be partly used for the company’s digital economy business and to strengthen its research and development department.

Meanwhile recent reports also suggest that Alibaba Group Holding Ltd. has committed to subscribe to more than a fifth of Ant Group’s forthcoming IPO. The new deal will help the eCommerce company to prevent the dilution of its stake after Ant goes public by owning 32 percent of its stake.

It is also said that Ant’s IPO has already gained interest from strategic investors including Singapore’s sovereign wealth fund GIC, Temasek Holdings and China’s National Council for Social Security Fund. 

Ant, China’s biggest mobile payments company, reported an operating income of $17.78 billion in the nine months to September with an increment of 42.6 percent compared to last year. The company’s nine-month gross profit rose to 74.3 percent.

According to media reports, the Hangzhou-based Ant has also gained approval from the Hong Kong Stock Exchange for the offshore leg of its IPO.

The Ant Group is planning to begin a pre-marketing period this week before opening order books next week in Hong Kong and the shares will commence trading a few days after the U.S. presidential election.

The FinTech group will raise its offering size up to $35 billion from $30 billion, considering the initial feedback from investors, with a valuation target of about $250 billion.

Once completed, Ant’s IPO would brighten Hong Kong’s status as a capital markets hub, with $28.8 billion worth of IPOs and secondary listings between the start of this year and mid-October.