China’s Ant Group has cleared the final hurdle for its $30bn initial public offering, after receiving approval from Hong Kong’s bourse ahead of what is set to be the world’s biggest-ever stock market debut.
The city’s exchange gave the deal its public stamp of approval on Wednesday, setting off a whirlwind of preparations for the hotly anticipated dual listing in Hong Kong and Shanghai. The deal is expected to top the record $25.6bn IPO in 2019 of Saudi Aramco, the world’s largest oil company.
Ant, the online payments group owned by billionaire Jack Ma, is valued at $318bn by some analysts. Bankers working on the IPO are anxious to price and list the shares ahead of the US presidential election on November 3, which is seen as a potential source of market volatility that could disrupt proceedings.
Shares will be split evenly between the two exchanges, with about 1.67bn listed on each, together totalling 11 per cent of outstanding shares, according to an updated onshore prospectus released on Wednesday evening in Shanghai. A further overallotment option, a so-called greenshoe, may also be exercised by bankers.
Documents released following the Hong Kong approval also revealed that Alibaba will subscribe for 730m shares in Ant’s Shanghai offering as a strategic investor through its Tmall subsidiary. That will take Alibaba’s holdings in Ant to more than 9.6bn shares.
The updated prospectus showed revenue for the June to September period rose more than 42 per cent year on year to Rmb118.2bn ($18bn), pushing gross profit up more than 74 per cent.
The IPO is expected to represent a huge windfall for Mr Ma, who is estimated by Bloomberg to be China’s richest person with a net worth of $61bn. Mr Ma’s Ant shares are calculated to be worth almost $17bn.
Expectations of a sharp jump in Ant’s share price on its debut have set off a scramble among institutional and retail investors to secure allocations to the group’s stock.
“It’s not a matter of yes or no — it’s a matter of how much I can get,” said Paul Schulte, founder of Hong Kong-based equity research firm Schulte Research, referring to appetite among investors. “There’s so much demand, you’re going to be lucky to get 10 per cent of what you ask for.”
Hong Kong has increasingly positioned itself as a global financing hub for Chinese technology companies after Washington threatened to remove these groups from US capital markets if they did not provide full access to their audit reports.
Chinese internet groups — including Alibaba, NetEase and JD.com — have raised billions of dollars through secondary listings in Hong Kong over the past 12 months.
Demand for the Hong Kong dollars needed to buy shares in Ant and other Chinese listings have also boosted the city’s currency in recent months. This year Hong Kong’s de facto central bank has been forced to sell HK$290bn ($37bn) of local currency — the most since the global financial crisis — to prevent it breaching the strong end of its trading band against the US dollar.
Earlier this month, there were some doubts over whether Ant’s IPO could proceed as planned after the company came under regulatory scrutiny in China for offering retail investors access to its share sale through an exclusive arrangement on its own mobile payments app. That arrangement prompted critical coverage from Chinese media.
The Shanghai Stock Exchange has also given Ant approval to list on its technology-focused Star Market. The Hong Kong portion of the IPO also depended on approval from the China Securities and Regulatory Commission, which gave the green light on Monday.