October 27, 2020
Photo: Visual China Group/Getty Images
Chinese fintech hopes to raise a record-breaking $34.5 billion at a valuation of more than $313 billion when Ant eventually goes public. The eagerly anticipated listing was set to be the world's biggest IPO, raising almost $37 billion at a $313 billion valuation. The deal was then put on ice by regulators. Here's everything you need to know about the company and its IPO.
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:
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.
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.
It is set to start trading in Hong Kong on Nov. 5, but no date has been given for the Shanghai listing yet.
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'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.
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:
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.
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
It wouldn't be a tech IPO filing without a few ridiculous and nonsensical claims. Fortunately, Ant doesn't disappoint:
This article was originally published on Aug. 25, 2020. It was updated on Oct. 27, 2020, with additional details about the IPO.
This article was updated again Feb. 2 to include information about Ant's stalled IPO.
Correction: This article was updated Aug. 26, 2020, to correct the potential value of Ant shareholders' stakes. It was also updated to clarify Ant Group's name and the number of annual Alipay users.