Ant plans US$17.5 bil Hong Kong IPO, no cornerstones

Jack Ma’s Ant Group is seeking to raise US$17.5 billion ($24 billion) in its Hong Kong share sale and will not seek to lock in cornerstone investors, confident there will be plenty of demand for one of the largest equity deals in the financial hub, according to people familiar with the matter.

The FinTech giant has assessed investor interest, betting it can pull off the Hong Kong portion of the initial public offering without cornerstone investors that are often needed for large deals, according to the people. Ant is leaning towards inviting these big investors for the Shanghai sale to mitigate price fluctuations, the people said, asking not to be identified because the matter is private.

The Hangzhou-based firm is planning to issue new stock equal to about 11% to 15% of the shares outstanding and split the float evenly between Hong Kong and Shanghai, the people added. Ant is mulling over what could be the world’s largest IPO, seeking to raise about US$ 35 billion in the dual listing at a valuation of about US$ 250 billion, people familiar with the matter have said.

Plans are still under discussion and could change. Ant declined to comment in an emailed statement.

Ant currently has about 27 billion shares outstanding. It is also planning to issue about 6% of its shares, on top of the new float, to help redeem stock for early C-round international investors that could not invest directly in the onshore entity, according to its prospectus.

If markets are favourable, Ant’s IPO may top Saudi Aramco’s record US$ 29 billion sale. Ant could exceed Bank of America’s market capitalisation.

Ant generated 72.5 billion yuan ($ 14.6 billion) in revenue in the first half of 2020, after full- year sales of 120.6 billion yuan in 2019, it said. The firm posted a 21.1 billion yuan profit in the first half of this year.

Ant, which grew out of the Alipay payments app, now gets the bulk of its revenue from providing quick consumer loans, fuelling China’s spending. It also runs an insurance business and offers money market funds, on top of credit scoring and technological services for the finance industry. —