Ant Group’s $35 billion IPO unlikely to be hurt by possible US curbs

Platform News: Ant Financial

Ant Group’s $35 billion initial public offering (IPO) is not likely to suffer from any US restrictions on the Chinese financial technology giant due to its very limited overseas presence, potential investors and analysts said.

Trump management officials are considering curbs on Ant, an affiliate Chinese e-commerce titan Alibaba, and Tencent over concerns their payment platforms undermine national security, Bloomberg News reported on Wednesday.

When implemented, the constraints would attest how Trump’s administration is trying to prevent Chinese businesses from ridding themselves in the US financial system before they become a substantial competitive threat.

Ant said it wasn’t aware of any discussions within the administration about limitations. Tencent and the White House did not immediately respond to requests for comment.

Ant is working towards a dual-listing at Shanghai and Hong Kong possibly when this month in what sources have stated could be the world’s biggest IPO, exceeding oil giant Saudi Aramco’s $29.4 billion float in December.

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Ant’s Alipay and Tencent’s WeChat payment systems are used primarily by Chinese citizens with balances in renminbi. Most of their US interactions are with retailers accepting payments out of Chinese travellers and businesses in the country.

That means for the US revenue contribution it would be even less than that,” said Morningstar senior equity analyst Chelsey Tam.

“I’m sure investors will ask about it during the roadshow but it’s quite easy for investors to understand that if Alipay and Wechat Pay go overseas the US is probably not the top priority,” Tam said.

Ant, making 95% of its earnings in China, is seeking to raise roughly $35 billion in an IPO after assessing early investor interest and based on a valuation of about $250 billion or more, journalists at our partner news agency Reuters have reported.

An official in a state-backed Chinese fund, a possible investor in an Ant IPO, said he wasn’t concerned about the projected American constraints since the market only accounted for a tiny section of the organization’s overall business.

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The official declined to be named since he wasn’t authorised to talk to the press.

“The ban is more about stopping Ant from expanding in the US in the future, but that shouldn’t have an immediate impact on the valuation as there is lot more growth left for Ant in China,” explained LightStream Research analyst Supun Walpola, that publishes on the Smartkarma platform.

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 and Julie Zhu. Additional reporting by Kane Wu. Writing by Sumeet Chatterjee. Editing by David Clarke.

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