Update: Alibaba’s Ant Marches Toward Dual Listing
Ant Group formally launched the process of concurrent initial public offerings in Hong Kong and Shanghai in what could become the world’s biggest new listing this year, the financial affiliate of e-commerce giant Alibaba Group Holding Ltd. said Monday.
Ant, whose crown jewel is the Alipay electronic payment service, has been the subject of intense speculation for years about its plans for an initial public offering (IPO). Last year it completed a restructuring in which Alibaba became a 33% stakeholder in a long-delayed deal that also relieved Ant of a major related financial obligation. That cleared the way for the current listing plan.
Ant plans to list shares on the Hong Kong Stock Exchange and on Shanghai’s year-old Nasdaq-style STAR Market, the company said without providing more specifics. Reuters reported last week that Ant aims to achieve a valuation of more than $200 billion, citing two sources familiar with the deal. On such a basis, a customary sale of 5% to 10% of the company would translate to raising between $10 billion and $20 billion.
Formerly known as Ant Financial, Ant operates China’s biggest digital wallet service and one of the world’s largest money market funds. Its businesses have also expanded into consumer and technology services. Ant was valued at $150 billion in its last funding round in 2018. The company didn’t release financial details, but it could post $2 billion in profit in the fourth quarter, according to Bloomberg data. Alipay had 1.3 billion annual active users as of March.
Ant said recent changes in the Hong Kong and Shanghai markets underpinned its decision. In Hong Kong, the exchange recently amended rules that previously forbade listings by companies with dual-class share structures. That paved the way for a secondary listing last November by New York-listed Alibaba, which raised nearly $13 billion.
In Shanghai, meanwhile, the launch last year of the STAR Market eliminated rules that previously set informal limits on how aggressively companies could price shares — a practice that often cost such companies millions of dollars in lost fundraising potential.
“The innovative measures implemented by Shanghai Stock Exchange STAR Market and the Hong Kong Stock Exchange have opened the doors for global investors to access leading-edge technology companies from the most dynamic economies in the world and for those companies to have greater access to the capital markets,” said Eric Jing, Ant’s executive chairman. “We are thrilled to have the opportunity to play a part in this development.”
Both exchanges welcomed Ant’s move.
“Ant’s decision to list at the HKEx affirms Hong Kong's role as the world's leading international IPO market,” Charles Li, chief executive of the Hong Kong bourse, said in a statement. “We will continue opening the gate to more global innovative and leading companies to list in Hong Kong.”
The Shanghai exchange’s year-old STAR Market has hosted more than 130 companies with a total market valuation of 2.4 trillion yuan ($343 billion), according to the exchange.
Ant picked China International Capital Corp. and JPMorgan Chase & Co., among other institutions, for its listings, Caixin learned.
The concurrent listings will “help the company accelerate its goal of digitizing 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,” Ant said.
“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators,” Jing said.
The Ant listing could come just months after another company, Semiconductor Manufacturing International Corp. (SMIC) made the biggest IPO on the Chinese mainland in a decade last week in a deal that initially raised 46.3 billion yuan ($6.6 billion) and could ultimately raise as much as 53.2 billion yuan if the underwriters exercise an overallotment option.
Contact reporter Yang Ge (email@example.com) and editor Bob Simison (firstname.lastname@example.org)
Bloomberg contributed to this story.
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