Ant Group Goes Public

With Shanghai’s expedited approval, and the Hong Kong IPO hearing most likely in late September, Ant’s IPO could happen as soon as October.

Ant Group’s IPO filing in late August officially kicked off its simultaneous approval process by the Shanghai and Hong Kong stock markets. Ant—the Chinese fintech giant controlled by billionaire Jack Ma—is seeking a $225 billion valuation and aims to raise $35 billion from its dual listing, which has the potential to become the world’s largest IPO.

In addition to its high-volume online payment business (with 12-month transaction value of 118 trillion Chinese yuan, or $17.3 trillion), Ant operates online lending platforms, issues insurance policies and controls the largest money-market mutual fund in mainland China. Ant’s multiple financial businesses classify it as a financial holding firm that must comply with the Chinese central bank’s new regulations, effective November 1, 2020. The new rules govern state-owned and private financial holding firms controlled by nonfinancial enterprises, to protect potential systemic risks by these behemoths—with their large scale of payment networks, investment platforms and other connected business. Ant has publicly announced its plan to comply with the new rules.

Although Ant Group chose to list in Shanghai and Hong Kong, global investors can still profit from Ant’s IPO through multiple channels. Top-tier investors can buy shares in Hong Kong through brokers like Interactive Brokers, Fidelity and Charles Schwab. Others can invest via Alibaba or related exchange-traded funds. As a 33% shareholder of Ant Group, Alibaba will benefit from any success Ant enjoys in terms of investment profit and an enhanced ecosystem. ETFs like Renaissance Capital’s International IPO ETF (ticker: IPOS), iShares MSCI China ETF (MCHI) and SPDR S&P China ETF (GXC) would add significant Ant shares following its IPO.

Regardless of current US-China friction, Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs are still joining other global banks to play major underwriting roles for Ant’s floating in Hong Kong, with an estimated $17.5 billion in fundraising. The IPO will reward these US banks with decent fee income and contribute to successful track records with Chinese companies, paving their way into mainland China’s market.

With Shanghai’s expedited approval, and the Hong Kong IPO hearing most likely in late September, Ant’s IPO could happen as soon as October.