CMC Markets: The eagerly anticipated world’s largest IPO of the Chinese fintech Ant Group is expected to raise more than 34 billion US dollars on Thursday and thus value the operator of the payment service provider Alipay at over 320 billion dollars.
This would put the IPO in the shade both the $ 25 billion that the former parent company Alibaba raised on the trading floor in 2014 and the $ 29.4 billion that Saudi Aramco raised last year as part of the largest IPO of all time.
The special thing about this IPO is not just the size, but also the hype it triggered in Asia. Investment banks and brokers are seeing record inquiries for Ant shares. Already now, three days before the planned start of trading, the IPO is almost 300 times oversubscribed. Ant is offering a total of only 41.8 million H-shares at Hong Kong $ 80 each to retail investors in Hong Kong.
State-ordered run on the shares
To get at the staggering numbers, local banks are bombarding potential investors with credit just to ensure stocks soar after trading opens.
Hong Kong’s banks and brokers are offering interested investors margin credit of nearly 300 billion Hong Kong dollars (the equivalent of around 39 billion US dollars), which they can use to buy into the IPO. A dangerous bubble threatens.
People in this country are reluctant to remember the IPO of the Deutsche Telekom share at the turn of the millennium. The numbers and magnitude are absolutely insane despite Ant’s massive success.
Since the IPO is already massively oversubscribed, the share price will in all probability go through the roof on the first day of trading. And that’s just as intentional – this IPO is nothing more than a government-commissioned people’s IPO.
More than just a payment processor
In addition to this “state-ordered” run on the shares, the business model of the Ant Group, whose major shareholder is none other than the multibillionaire and Alibaba founder Jack Ma, can certainly serve as a reason for the strong interest of investors in the company shares.
The Ant Group is more than just a company with the rather low-margin payment processing business. Customers can also use the app to apply for loans, invest in funds and take out insurance. A lot of quick money is earned here not only with the transactions, but also with the data collected.
With Alipay you have the hottest company under your wing. And the IPO so shortly after the presidential election in the USA also has a special political appeal: It is supposed to symbolize China’s superiority over the USA.
As an aside, Ant trades under the ticker symbol 688688 in Shanghai and 6688 in Hong Kong, in keeping with Jack Ma’s fondness for the number eight, which is associated with wealth in China. By the way, Ma’s Alibaba Group has the ticker symbol 9988 in Hong Kong.
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