Ant Group, the financial affiliate of e-commerce giant Alibaba Group Holding Ltd., said Monday it has formally launched the process to make concurrent IPOs in Hong Kong and Shanghai, it what could become the world’s biggest new listing this year.
Ant, whose crown jewel is the Alipay electronic payment service, has been the subject of intense speculation about its plans to make an IPO for years. But last year it completed a restructuring that saw Alibaba become its 33% stakeholder in a long-delayed deal that also relieved it of a major related financial obligation. That cleared the way for the current listing plan.
Ant did not provide more specifics beyond saying it has begun the process to list shares on the Hong Kong Stock Exchange and on Shanghai’s year-old, Nasdaq-style STAR Market. But Reuters reported last week the company was aiming to achieve a valuation of more than $200 billion, citing two sources familiar with the deal. Thus a customary sale of 5% to 10% of the company would translate to raising between $10 billion and $20 billion.
Ant noted that recent changes in both Hong Kong and Shanghai underpinned its decision. In Hong Kong, the exchange recently amended rules that previously forbade listings by companies with dual-class share structures like the ones held by many Chinese tech startups. That paved the way for a second listing last fall by New York-listed Alibaba, which raised nearly $13 billion in the offering.
In Shanghai, meanwhile, last year’s STAR Market launch also eliminated rules that previously set informal limits on how aggressively companies could price their shares — a practice that often caused such companies millions of dollars in lost fundraising potential.
“The innovative measures implemented by Shanghai Stock Exchange STAR Market and the (Hong Kong Stock Exchange) have opened the doors for global investors to access leading edge technology companies from the most dynamic economies in the world and for those companies to have greater access to the capital markets. We are thrilled to have the opportunity to play a part in this development,” said Eric Jing, Ant’s executive chairman.
Ant said the concurrent listings will “help the company accelerate its goal of digitizing the service industry in China and driving domestic demand, as well as position the company to develop global markets with partners and expand investment in technology and innovation.”
“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators,” Jing said.
The Ant listing could come just months after another company, Semiconductor Manufacturing International Corp. (SMIC) made the biggest IPO on the Chinese mainland in a decade last week, in a deal that initially raised 46.3 billion yuan ($6.6 billion) and could ultimately raise up to 53.2 billion if the underwriters exercise an overallotment option.
Contact reporter Yang Ge (geyang@caixin.com)
