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Deal
Retail investors bid for a record $ 3 trillion of shares in Ant Group Co Ltd’s initial public offering (IPO), set to become the world’s largest, as family savers bid on demand for their financial services in China.
The logo of Ant Group, a subsidiary of Alibaba, is displayed at its headquarters in Hangzhou, Zhejiang Province, China on October 26, 2020. REUTERS / Aly Song
HONG KONG: Retail investors bid for a record US $ 3 trillion worth of shares in Ant Group Co Ltd’s initial public offering (IPO), set to become the world’s largest as family savers bet on the demand for its financial services in China. .
Ant’s double listing is set to raise around US $ 34.4 billion, split fairly evenly between the Shanghai STAR Market and Hong Kong, topping Saudi Aramco’s listing by US $ 29.4 billion in December. past.
Investors, both retail and institutional, are rushing to buy Ant, which operates China’s largest payments platform and other financial services, despite the risks of increased scrutiny at home and abroad.
The Shanghai tranche of the IPO attracted about 19 trillion yuan (US $ 2.8 trillion) of offerings from retail investors, or 872 times the number of shares destined for them, a company that went public showed on Thursday. of values.
The Hong Kong tranche received HK $ 1.3 trillion (US $ 168 billion) in offers, or 389 times the shares on offer, said people with knowledge of the matter on Friday, declining to be identified because the information is not yet public.
Book construction for the Hong Kong leg of Ant’s IPO, backed by e-commerce giant Alibaba, ran from Monday to Friday, while the books for the Shanghai leg were open for one day on Thursday.
The $ 3 trillion in offerings from retail investors, equivalent to the UK’s gross domestic product, comes against the backdrop of volatile global markets ahead of next week’s US presidential election and a grim global economic outlook.
However, investors in the IPO have set aside company-specific and broader market concerns in hopes that Ant will continue to benefit from the rapid digitization of financial services in China.
Harrison Chan, a 25-year-old financial professional from Hong Kong, spent 40 percent of his monthly income applying for Ant shares, now wondering if he will get any, given the sheer number of offers made.
“I am confident in the future outlook of the company because it is involved in many different businesses … and they are all online services, which is the direction the world is going to go, so I think its potential is huge,” said Chan. .
‘PROMISING FUTURE’
Starting as a payment processor in 2004, Ant has built an empire in China by offering its users short-term loans that pay off in minutes and selling insurance and investment products.
The unprecedented retail frenzy over Ant shares is backed by a massive amount of margin lending from financial institutions, with brokerages in Hong Kong lending billions.
Hangzhou-based Ant decided to exercise an option called greenshoe to increase the stock offering by 15% and is now selling a total of 1.92 billion shares on the Nasdaq-style STAR market, according to Ant’s filing. against the Shanghai Stock Exchange.
On Monday, the company priced the Shanghai tranche at 68.8 yuan (US $ 10.27) per share. Before the greenshoe, it offered 4% of the initial 1.67 billion shares to retail investors primarily across the country.
Retail investors’ enthusiasm for Ant’s IPO has triggered a recovery mechanism, where their excessive over-subscription could result in them receiving a larger stake, Ant said at the Shanghai presentation.
“It is a definite thing that one day a Chinese company will have the largest initial public offering, but it came quickly,” said Qin, 23, a consultant for one of China’s leading banks, based in Beijing, who declined to give his Name.
“This has a lot to do with China’s growing economic size and its huge population contributes a lot to Ant’s business,” said Ms Qin, who has applied for Ant shares in Shanghai. “I am confidently investing in Ant because of its promising future.”
(Reporting by Julie Zhu and Sumeet Chatterjee; additional reporting by Carol Mang in the Hong Kong and Shanghai newsroom; editing by Kirsten Donovan and Mark Potter)
