Jack Ma. Picture: BLOOMBERG
Jack Ma. Picture: BLOOMBERG

Hong Kong — Billionaire Jack Ma’s Ant Group is seeking a valuation of more than $200bn as it goes public in Hong Kong and Shanghai, people familiar with the matter said, kicking off a landmark coming-out party for China’s leader in internet finance.

The parent of China’s largest mobile payment company will pursue a simultaneous dual listing in Hong Kong and on the Shanghai stock exchange’s Star board, the Hangzhou-based firm said, in what promises to be one of the largest debuts in years.

Ant, formerly known as Alipay, is already more richly valued than most Wall Street firms. If conditions are favourable, it could seek to raise more in its initial public offerings (IPOs) than Saudi Aramco’s record $29bn haul, one of the people said, asking not to be identified talking about a private deal.

The crown jewel of the sprawling Alibaba empire, Ant has been accelerating its evolution into an online mall for everything from loans and travel services to food delivery, in a bid to claw back shoppers lost to Tencent Holdings.

Ant CEO Simon Hu has said that he wants people to think of Alipay as more than just a niche provider of financial services and the payments gateway for the world’s biggest e-commerce platform. Alipay now caters to a wide array of consumer needs from groceries to wealth management, and hotel booking to loan applications.

Star board

Dual listings, once the preferred route for China’s largest corporations, have fallen out of favour in part because of the complexities involved in orchestrating share sales across very different capital regimes. Ant’s decision is a triumph for Shanghai’s fledgling Star board, conceived with the ambition of becoming mainland China’s preferred listing destination for high-growth companies.

A dual listing also helps Hong Kong Exchanges & Clearing, which is seeing a renaissance of tech listings after it relaxed rules in the wake of losing China’s biggest tech firms — including Alibaba Group Holding, which owns a third of Ant — to New York. Alibaba shares rose more than 4.5% in pre-marketing trade in New York on Monday.

“Despite abundant capital, it is not sure how investors would view Ant Group since there are a lot of tech stocks in the market,” said Pamela Chung, a Hong Kong-based MD and head of IPOs at consultancy Tricor Group.

Ant picked China International Capital, Citigroup, JPMorgan Chase & Co and Morgan Stanley for its Hong Kong IPO, according to people familiar with the matter. The banks are working with Ant on the share sale in Hong Kong, which could raise about $10bn, the people said. More advisers could be added to the offering at a later stage and the details could change because deliberations are ongoing, they said.

Ant, valued at $150bn in its last funding round, generated $2bn in profit in the fourth quarter, based on calculations made from Alibaba’s filing. The company — which operates China’s biggest digital wallet and one of the world’s largest money market funds — is expanding into consumer and technology services.

Its technology solutions include services in cloud computing, artificial intelligence, blockchain and risk control. Ant aims to assist banks to dole out loans to consumers, and to partner with brands like KFC Holding and Marriott International to attract and manage customers.

Hu is betting that those strategies will help Ant defend its dominance of China’s $29-trillion mobile payments space. Alipay’s share of mobile payments has increased for three consecutive quarters, rising to 55.1% in the fourth quarter, according to research consultant iResearch. Tencent has 38.9% of the market.

It also diversifies Ant’s business into less sensitive areas after the firm drew regulatory scrutiny for its blistering expansion in financial services with in-house products. To mark the transformation, Ant changed its registered name to Ant Group from Ant Financial Services Group at the end of May.

Ant’s origins are not without controversy. In 2010 Ma hived off the six-year-old Alipay from Alibaba over the objections of shareholders including Yahoo!, citing potential regulations that may curb foreign ownership of financial businesses. Alipay then expanded into loans, wealth management and consumer credit under the entity that’s now known as Ant Group.

The dispute was eventually settled via an arrangement that granted Alibaba a proportion of Alipay’s income. Alibaba ended up buying a 33% stake in Ant in 2019.

Bloomberg

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