Ant Group to close Hong Kong institutional book early amid ‘overwhelming’ demand for IPO

Ant Group

Ant Group will close institutional order publications of the Hong Kong part of its record-setting double IPO ahead of schedule as a result of strong demand, sources with direct knowledge of the issue said.

The institutional book of the $17.2 billion Hong Kong record was expected to close on Thursday, but that deadline will be accelerated to Wednesday 5.00pm in every region, three sources have said.

The publication was oversubscribed just 1 hour following the launch on Monday, two individual sources said, demonstrating investor frenzy for the initial public offering (IPO) of the Chinese FinTech giant that has stoked heavy demand for money and delivered Hong Kong currency market rates to five-month highs.

Ant Group declined to comment on the planned early closure of the Hong Kong institutional publication.

It is looking to raise up to $34.4 billion in Hong Kong and Shanghai, with the deal divided between the two cities, giving it a valuation of about $312 billion.

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The sources asked not be identified since they were not authorised to comment to media.

Ant, which operates China’s largest mobile payments platform Alipay, is an affiliate of e-commerce giant Alibaba Group.

It’ll offer 41.76 million stocks, or 2.5percent of its total stocks in Hong Kong, to retail investors whose demand to purchase the inventory is expected to be strong.

Hong Kong operates a ‘clawback’ system where heavy oversubscription from small investors can result in them getting a larger share.

The prospectus indicates the total amount will be increased to 167.1 million shares, or 10% of the deal, if the initial retail allocation is more than 20x oversubscribed.

MONEY MARKET RATES CLIMB

The city’s agents are readying billions of dollars of margin financing to lend to customers to purchase the stock. .

Retail investors need to finalise and pay for the stocks they have bid for by Friday, based on Ant’s prospectus.

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The cash will probably be locked up till allocations are announced on Nov. 4 and agents expect it could tie up over HK$1 trillion (approximately $129.03 billion) in retail funds. Investors not given stocks are going to have their money returned.

A listing HK$677.7 billion value of cash was locked up for its Nongfu Spring IPO that raised $1.1 billion in September.

“The demand is overwhelming… It will smash all previous records,” Francis Lun, Hong Kong-based chief executive of GEO Securities, stated about retail need for Ant.

Hong Kong’s money markets tightened on Tuesday as demand for money to buy Ant shares pushed up Hong Kong dollar rates. The one-week Hong Kong Interbank Offered Rate jumped nearly 40 basis points to 0.51054 percent, its highest since late May.

Spot week Hong Kong dollar forward also hit their most expensive since May.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Scott Murdoch in Hong Kong and Tom Westbrook in Singapore. Editing by Muralikumar Anantharaman.

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