Alibaba throws giant clout behind Ant's IPO

Top News | Bloomberg and Avery Chen 23 Oct 2020

Chinese e-commerce giant Alibaba has agreed to subscribe to more than a fifth of Ant Group's imminent initial public offering, propping up its part-owned fintech giant's potentially US$35 billion (HK$273 billion) debut.

Ant will price the Shanghai portion of its dual listing on Tuesday and allow subscriptions on Thursday. Ant hasn't yet spelled out dates for the Hong Kong leg of the IPO, but they're expected to be similar.

Some local brokers have already said they will offer free-interest margin financing services for the deal.

Shares will almost certainly start trading only after the US presidential vote on November 3. Ant will issue no more than 1.67 billion shares in the mainland, equivalent to 5.5 percent of the total outstanding before the so-called greenshoe option, says its prospectus on the Shanghai Stock Exchange. It will issue the same amount for its Hong Kong offering.

Alibaba will buy 730 million of about 1.67 billion Shanghai-listed A shares as part of a placement to strategic investors, it said in a stock exchange filing yesterday. Including the Hong Kong tranche of its IPO, Ant intends to sell a total of 3.3 billion shares.

In addition, the financial services giant plans to issue about 1.16 billion Hong Kong-listed or H shares to Alibaba as part of a distribution of about 3.26 billion shares to backers.

Alibaba cofounder Jack Ma Yun's Ant Group is racing toward what could be the world's largest coming-out party, slated for sometime over the coming weeks. The IPO shares deal helps Alibaba prevent the dilution of its stake after Ant goes public.

The Chinese e-commerce giant will hold about 32 percent of its affiliate's shares after the IPO, based on data.

In Hong Kong, Ant's IPO continued to push demand for local currency. The Hong Kong Monetary Authority sold HK$17.4 billion in the market yesterday as the Hong Kong dollar hit the upper limit of the trading band.

The aggregate balance, a measure of liquidity in the local banking system, is set to increase to HK$384.87 billion on Tuesday. Ant's IPO is said to have drawn interest from strategic investors, including Singapore's sovereign wealth fund GIC, Temasek Holdings and China's US$318 billion National Council for Social Security Fund.

The strong demand means the Alipay operator could fetch a valuation of at least US$280 billion, despite concern that people within the Trump administration are exploring restrictions on the Chinese financial tech nology giant, say people familiar with the matter.

Ant reported a 74 percent jump in gross profit to 69.5 billion yuan (HK$80.63 billion) from January to September, said an A-share prospectus posted with the Shanghai exchange.

Editorial: Ant takes no chances with election

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