Retail investors put bids for a record $3 trillion of stocks in Ant Group’s initial public offering (IPO), place to be the world’s biggest, as mom-and-pop Realtors stake on demand because of its financial services in China.
Ant’s dual listing is set to increase about $34.4 billion, split quite evenly between Shanghai’s STAR Market and Hong Kong, topping Saudi Aramco’s $29.4 billion record last December.
Investors, both institutional and retail, are hurrying to buy into Ant, which operates China’s most significant payments platform along with other financial services, despite dangers of higher scrutiny at home and abroad.
The Shanghai leg of the IPO brought about 19 trillion yuan ($2.8 trillion) of bids from retail investors, or 872 times the number of shares earmarked for them, a company filing to the stock market showed on Thursday.
The Hong Kong tranche obtained HK$1.3 trillion (approximately $168 billion) at bids, or 389 times the shares on offer, said people with knowledge of the problem on Friday, declining to be identified as the information isn’t public yet.
The bookbuilding for the Hong Kong leg of the IPO of Ant, backed by e-commerce behemoth Alibaba, ran from Monday to Friday, while books for the Shanghai leg were available for one day on Thursday.
The $3 trillion of retail buyer forecasts, equivalent to the gross domestic product of the United Kingdom, comes against the background of shaky global markets ahead of next week’s U.S. presidential election and a dour global financial outlook.
Investors at the IPO, however, have narrowed aside company-specific and wider market concerns on hopes that Ant will continue to profit from the fast digitization of financial services in China.
Harrison Chan, a 25-year-old financial specialist in Hong Kong, spent 40 percent of his yearly earnings on applying for Ant shares, and is currently wondering if he’ll get any, given the high number of bids made.
“I am confident in the company’s future prospect because it is involved in many different businesses… and they are all online services, which is the direction the world would be heading to, so I think its potential is huge,” Chan explained.
Starting as a payments processor in 2004, Ant has built an empire in China by offering its users short-term loans which are credited within seconds, and selling investment and insurance solutions.
The unprecedented retail frenzy to Ant stocks is backed by massive amount of margin financing by financial institutions, together with brokerages in Hong Kong lending billions.
Hangzhou-based Ant decided to work out a so-called greenshoe choice to improve the share offer by 15 percent and is currently promoting a total of 1.92 billion shares on the Nasdaq-style STAR Market, based on Ant’s filing with the Shanghai market.
The company on Monday set the price of the Shanghai leg in 68.8 yuan ($10.27) each share. Ahead of the greenshoe, it had been offering 4% of their initial 1.67 billion shares to mostly retail investors throughout the nation.
Retail investors’ enthusiasm towards Ant’s flotation has triggered a clawback mechanism, where their heavy over-subscription could result in them receiving a greater share, Ant said in the Shanghai filing.
“It’s a definite thing that one day that a Chinese company is going to have the largest IPO ever but it just came quick,” said Beijing resident Ms Qin, 23, a consultant with one of the leading banks in China, declining to give her first name.
“This has very much related to China’s growing economic dimensions and its huge population contributes a great deal to Ant’s companies,” said Ms Qin, who has applied for Ant shares in Shanghai.
“I am confidently investing in Ant due to its promising future.”
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Julie Zhu and Sumeet Chatterjee. Additional reporting by Carol Mang in Hong Kong and the Shanghai newsroom. Editing by Kirsten Donovan and Mark Potter.
To stay on top of the latest developments across the platform economy and gain access to our problem-solving tools, databases and comprehensive content sets, you can become a member for just $7 per month.