Ant Group, Gearing Up for a Massive IPO Away from the NYSE
China’s richest man is preparing for an initial public offering in Shanghai and Hong Kong, but not New York. Jack Ma, founder of Alibaba Group Holdings, is going to hold this process in both markets simultaneously.
The move seems to come from a series of moves to counter a fallout from US-China tensions.
Ant Group, the operator of Alibaba’s financial service Alipay, is still discussing the size and timing of the share sale. Nonetheless, the stock market is still expecting it to be one of the largest IPOs in history.
Analysts expect Ant to begin its value at more than $200 billion. Notably, the price is higher than the state-owned China Construction Bank value.
In September, Alibaba received a 33% equity interest in the Group under its prior name, Ant Financial. The restructuring ended a profit-sharing arrangement between them.
Alibaba doesn’t control Ant Group, per se, but Jack Ma controls about 50 percent of the latter’s voting interest.
Ant’s decision to hold its IPO away from New York is part of a larger shift in the stock market. The event is part of a much broader financial shift to eastern markets, with Jack Ma as its biggest influencer.
Ant Group, a Symbol of Financial Competition
Hong Kong had long begun its journey to promote tech companies into their exchanges by launching a Nasdaq-like index. The Star Market began last year to help investors keep track of the largest tech start-ups in the region.
Ant’s executive chairman Eric Jing said the Star Market opened the door for global investors into their tech sector. Moreover, tech-focused stocks would then also have access to the capital markets.
The biggest Chinese tech companies that held their IPOs in Hong Kong are Ma’s Alibaba Group Holding, JD.com, and Netease.
Ant Group confirmed the plan for IPO in the Hang Seng Index on Monday, expecting to take 6 months minimum.
Different banks in the US expect various starting valuations for the company:
Bank of America analysts made an estimate of $210 billion, 45 times its 2021 earnings estimates. JP Morgan believes it would start at $218 billion, 25 times the estimated 2023 earnings.
Ant Group could be on track to beat fintech giants like PayPal, Visa, and Master Card in future stock trading.
Currently, Alipay and WeChat Pay are in a duopoly with a combined value of US$8.3 trillion in the Chinese market. It accounted for 90% of third-party mobile payments in the country in 2019.
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