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Alibaba Affiliate Ant Group’s Listing Could Be the World’s Largest IPO

Alibaba Affiliate Ant Group’s Listing Could Be the World’s Largest IPO

Marco de Matos, Anchor Research

Financial technology (fintech) Group and Alibaba affiliate, Ant is looking to raise $35bn through an offering that could value the company at $280bn following strong demand in what is widely expected to be a record dual listing. According to Bloomberg, at its current valuation, Ant will be three times the size of Citigroup (which has a current market cap of c. $89.3bn) and its parallel listings on the Hong Kong and Shanghai stock exchanges would be the biggest float in history, beating Saudi Aramco’s record of a $25.6bn IPO.
 
Retired Alibaba Chairman and Founder Jack Ma holds a majority stake in Ant, and Alibaba has a 32.65% non-controlling interest in the company. Ant filed for the IPO In August to fund the growth of its financial services business. On 19 October it won approval from the China Securities Regulatory Commission (CSRC) for the Hong Kong leg of the IPO but it still needs approval from the Hong Kong stock exchange’s listing committee. In September, the Shanghai Stock Exchange approved the listing of Ant shares on its tech-focused Star market.
 
Ant was formed in 2014 to run digital payment/mobile wallet service Alipay, which is used by c. 1bn people in China with most of its revenue coming from quick consumer loans. Ant’s filing describes Alipay as being “synonymous with digital payments in China, …”. More recently, Ant has been moving into the financial industry by leveraging data from the Alibaba app to provide customers with other banking services and it currently has around 710mn monthly users. In 2019, Ant generated revenue of RMB120.6bn (c. $17.7bn), up from RMB85.7bn in 2018.
 
The Hangzhou-based firm will issue new stock equal to 11%-15% of its outstanding shares and split the float evenly between Hong Kong and Shanghai, according to media reports. Amid tensions between the US and China, Ant is facing the possibility of restrictions in the US as the Trump administration continues a crackdown on Chinese companies listed on US stock exchanges.

Written exclusively for Moore South Africa by Marco de Matos from Anchor Research.