Ant Group IPO

Tuesday should have seen the listing of shares of Ant Global in the largest IPO in history but it was cancelled at the last minute. This came after Jack Ma, the founder of the company, the Executive Chairman and the Chief Executive Officer were all summoned to a meeting with regulators a few hours before the launch. 

Later the Shanghai Exchange announced that it had cancelled the listing of Ant Group’s A-shares on the STAR Market and published the suspension decision which stated it was due to material matters.

Reasons varied from capital controls to politics around Jack Ma who is currently China’s second-richest man and now a global philanthropist who donated medical testing and protective equipment to different countries around the world as they battled Covid-19. 

The company was to raise $34 billion from the IPO, valuing it at $313 billion, but by the time of the cancellation, they had a staggering $3 trillion in bids from investors. The company had allocated 1.67 billion shares each for Shanghai and for Hong Kong to raise 115 billion Yuan ($17.23 billion) from each location, but Shanghai investors bid $2.8 trillion, 872 times the number of shares allocated, while those in Hong Kong bid $168 billion or 389 times their allocation.

This came after a book building done by Citi, JP Morgan, Morgan Stanley and CICC who were the joint global coordinators and book-runners. Also participating was Credit Suisse, Barclays, Deutsche Bank, ING, Goldman Sachs, ICBC, BNP Paribas and Mizuho, among other banks, while the Bank of China (Hong Kong) was the receiving bank.

Ant was started within the Alibaba Group in 2004 as a company offering online escrow services. It was spun off from Alibaba in 2011, which itself reported a 30% rise in quarterly revenue today to reach $23 billion. Earlier this year Ant had 711 million active users, just behind 800 million on Tencent’s WeChat Pay. It now serves 1 billion users and 80 million small businesses in China, and recently provided billions of dollars in loans to Chinese companies impacted by Covid-19 and also waived fees, subsidized logistics, and offered free streaming and work from home tools.

The invitation to invest noted that financial systems that have been in place for the last 200 years were designed to serve 20% of the population and that better products have to be designed for the other 80% through digital payments, digital finance, and digital daily life services. The company has 26,000 patents and patent applications.  

One of the risks cited in the listing documents is possible action by US President Donald Trump to restrict the use of payment services of Ant.

Refunds to investors started on Wednesday, November 4, and it is now expected that the IPO could be delayed by at least six months.

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