Ant Group, a subsidiary of Alibaba Group that operates a popular China-based online payment platform, is planning to list its shares through a simultaneous initial public offering (IPO) in Hong Kong and Shanghai. Unlike other major tech firms, Ant Group is opting to skip listing in the U.S. entirely and directly float its shares at home.
The decision to list its shares on two Chinese exchanges at the same time is likely a result of the ongoing tensions between China and the U.S., which have spilled over to both counties' capital markets. With U.S. lawmakers now in the process of passing a blanket law that would increase scrutiny on Chinese firms wishing to list in the country, the prospect of a U.S. listing has now become a challenging proposition for some.
Ant Group has reportedly not yet decided on the size and timing of its simultaneous share sale but sources with knowledge of the matter predict that it could become one of the country's largest IPOs in years. As of the moment, Ant Group is estimated to have a market valuation of more than $200 billion, significantly larger than the valuation of state-owned China Construction Bank. Typically, once a company expresses interest in launching an IPO, it usually takes them about six to nine months to finish the application process. This means that Ant Group could be launching its IPO sometime in early 2021.
The company, previously known as Ant Financial, is partially controlled by Alibaba Group, which holds a 33 percent equity interest. According to its prospectus released in November, Alibaba's co-founder Jack Ma effectively controls 50 percent of the voting rights in the company. However, Ant Group is considered to be a separate entity from Alibaba and is not technically under its control.
In a press release published on Monday, Ant Group's executive chairman, Eric Jing, stated that the decision to list both in Shanghai and Hong Kong comes after the implementation of several supporting measures that have opened the country's capital markets to more domestic tech companies.
He added that both exchanges in Hong Kong and Shanghai present unique opportunities for the company to raise capital. Analysts have pointed out that by tapping both offshore and onshore markets, Ant Group can effectively deepen its pool of potential investors.
Both exchanges have welcomed the idea and are open to supporting Ant Group's plans for a simultaneous IPO launch. HKEX chief executive officer Charles Li said in a statement that they welcomed the news of Ant Group's intention to list in the city.