Ant's financials

Ant started out as Alibaba's Alipay way back in 2004, before eventually being spun off into its own entity. It's now a titan of Chinese payments and finance — and an incredibly lucrative one at that, too.

The company has two main businesses:

• Alipay, which has over 1 billion annual users and 711 million monthly active users, is its most established business. Ant processed almost $16 trillion worth of payments last year, netting the company $7.4 billion in revenue.
• But payments is no longer Ant's biggest business. In recent years, the company has aggressively grown its "digital finance technology platform," licensing out technology to financial services companies so they can offer loans, insurance and investment options on Alipay. Last year, that division delivered 56% of Ant's revenue, or $9.7 billion.

Unlike many tech companies listing this year, Ant is actually profitable. Last year it made a profit of $2.6 billion, and it's already beaten that in 2020: Ant made $3.1 billion in the first six months of the year.

The IPO plan

Ant is pursuing a dual-listing in Hong Kong and Shanghai's STAR market. The latter is likely to attract domestic investors and "curry favor with Xi Jinping," as Fraser Howie, co-author of "Red Capitalism," recently told Protocol.

The company will sell at least 11% of its shares at a price of 68.8 yuan per share in Shanghai, and 80 HKD in Hong Kong. That will raise just under $34.5 billion.

• That will make it the largest amount ever raised in an IPO, beating Saudi Aramco's $29 billion. (Previous to that, the biggest ever IPO was Alibaba itself, back in 2014, when it raised $25 billion.)
• Ant could end up raising even more still if its over-allotment option is exercised. Reuters reports that the Hong Kong portion of the IPO was oversubscribed within an hour of books opening, suggesting that filling an over-allotment option wouldn't be hard.

It is set to start trading in Hong Kong on Nov. 5, but no date has been given for the Shanghai listing yet.

• Citigroup, JPMorgan Chase, Morgan Stanley and CICC are sponsoring the Hong Kong listing, but American names are nowhere to be seen on the list of Shanghai sponsors. That's reportedly because of STAR market rules that require banks to invest in any deal they sponsor.

What could go wrong

Ant's complicated business means it's subject to a whole range of risks. Its IPO prospectus lists a plethora of potential regulatory issues, highlighting the risk of operating in such a sensitive and tightly controlled area as finance.

Geopolitics could pose a huge threat, too, the company said, pointing to the "deterioration in the relationship between China and the United States" as an issue on several fronts:

• Ant warned that it could face "protectionist policies and regulatory scrutiny" that would hamper its ability to expand abroad.
• It also noted that the current state of affairs could make it harder for Ant to hire engineers, by "discouraging U.S. persons to work for Chinese companies."
• Acquisitions are under threat, too: Ant mentioned its failed MoneyGram takeover, which was blocked by the U.S., and the struggles it has had in investing in India's Zomato thanks to new foreign investment rules.

Ant's not immune to COVID-19, either. The company said its cross-border payment business could face a "significant negative impact" thanks to the dearth of international travel, while lockdowns meant "lower levels of consumption negatively impacted the use of our digital payment services."

Looking further ahead, Ant cautioned that the economic slowdown following the pandemic could lead to a slowdown in spending, as well as increased defaults on loans sold on its platform.

Who gets rich

Alibaba founder Jack Ma is Ant's largest shareholder, and he stands to win big from the IPO. Ant's filing says Ma owns about 11% of the company, a stake worth $34 billion at Ant's $313 billion valuation. Other top shareholders include:

• Lucy Peng, whose stake could be worth $6.6 billion.
• Eric Jing, who could have $3.9 billion worth of shares.

Institutional shareholders also stand to win. Alibaba's 33% stake, which it is maintaining through the purchase of 730 million shares in the IPO, could be worth over $100 billion, while Silver Lake, which invested at a $150 billion valuation in 2018, could have a $1.4 billion stake.

And Chinese citizens also have a small interest: The country's National Council for Social Security Fund has a 2.94% stake in the company, which could be worth over $9 billion.

What people are saying

On the scale of Ant: "[Ant's valuation] is larger than most global banks. It is three to four times the size of Goldman Sachs' equity value." — Lex, Financial Times

On understanding the company: "At first look, everyone agrees this is a good company. But it isn't easy to understand their businesses and advantages … You can't get a full picture from either a financial or a technological perspective." — David Dai, Sanford C. Bernstein

On the political situation: "Beijing clearly wants 'homegrown champions' to float on domestic exchanges, and Ant is ready to comply." — Brock Silvers, Adamas Asset Management

On the prestige of record-breaking: "Ant's IPO is viewed as iconic for both Hong Kong and mainland Chinese stock markets. Both markets welcome a blockbuster." — Tian Jie, Analysys International

Ant's words of wisdom

It wouldn't be a tech IPO filing without a few ridiculous and nonsensical claims. Fortunately, Ant doesn't disappoint:

• "We do not believe bigger is better; our pursuit is sustainable development that lasts at least 102 years."
• "Our name is important to us. We call ourselves Ant because we believe that small is beautiful, small is powerful."