Record IPO in 2020 to raise $34 billion for the Ant Group
Ant Group is expected to make its market debut on November 5 in a dual listing in Shanghai and Hong Kong. The Shanghai portion of the shares, valued at $10.26 each have already been purchased by institutional investors including Singapore’s GIC and the Canada Pension Plan Investment Board. This marks a departure from the typical divergence of valuations between Hong Kong and the mainland, with those listed on Shanghai attributed higher valuations. The release of 11% of Ant Group’s equity values the entire company at around $313bn, which is similar to JPMorgan Chase and four times larger than another Wall Street institution in Goldman Sachs.
Ant Group are attracting this level of funding because of the universal and cutting-edge nature of their digital payment solutions. It is the company responsible for Alipay, which currently has around 1.3bn users in China. Shaun Rein, founder and managing director of China Market research group in Shanghai said to “Think of Alipay as Visa, MasterCard, Citibank, Fidelity… all rolled up into one. On the Alipay platform, you pay for things, you buy insurance, you buy wealth management. Your whole life revolves around Alipay.” This view is corroborated by Jackson Wong, asset management director at Amber Hill Capital Ltd. who explained that the organisation is “betting that Ant Group will be able to grow at a very high pace in the future.” The company and their competition, WeChat Pay, have made large cities in China virtually cashless.
Ant Group is a far larger and more diverse entity than PayPal, which merely processes financial transactions. This is the convenience that its customers are looking for which truly sets the business apart. The growth potential of a fintech that has conquered the largest market of its kind in the world is naturally attractive to investors. However, Jack Ma has still maintained his criticism of the Basel Accords, which regulate global financial institutions by enforcing capital requirements. He called it a “club for the elderly” which also stifles innovation. European and US antitrust regulators meanwhile have increasingly taken aim at Big Tech companies, which are the main form of competition to the Ant Group.
It remains to be seen how successful the IPO will eventually be. The market date is set two days after the US Presidential election, and the Trump administration have already been said to have considered adding the Ant Group to a trading blacklist. However, this does not detract from a momentous and record-breaking IPO that increasingly exhibits the importance of the Asian markets.
Sources -
https://www.ft.com/content/928dbbfa-a242-4986-a0e6-490fb542be77
https://www.investopedia.com/terms/b/basel_accord.asp
