Jack Ma's Alibaba to get a fifth of Ant shares in mega IPO

Alibaba Group decided to subscribe to greater than a fifth of Ant Group’s imminent initial public offering, propping up its part-owned fintech giant’s potentially $35 billion debuts.

Asia’s largest corporation will buy 730 million around 1.67 billion Shanghai-listed A shares within a placement to strategic investors, the e-commerce giant said in a stock market filing. Including the Hong Kong tranche of its IPO, Ant intends to market a complete of 3.3 billion shares.

In addition, the financial services giant plans to issue about 1.16 billion Hong Kong-listed or H shares to Alibaba, part of the distribution of around 3.26 billion shares to existing backers.

Alibaba co-founder Jack Ma’s Ant Group is racing toward what may be the world’s major ever coming-out party, slated for some time over the coming weeks. The IPO shares deal helps Alibaba avoid the dilution of its stake after Ant goes public. The Chinese e-commerce giant will hold about 32 % of its affiliate’s shares following the IPO, based on data compiled by Bloomberg.

Ant’s IPO is thought to have drawn interest from strategic investors including Singapore’s sovereign wealth fund GIC Pte, Temasek Holdings, and China’s $318bn National Council for Social Security Fund. That strong demand means the Alipay operator could fetch a valuation of at least $280bn, despite concern that people within the Trump administration are exploring restrictions on the Chinese fintech giant, according to people familiar with the problem.

 

Ant reported a 74 % jump in gross profit to 69.5bn yuan ($10.4bn) from January to September, according to an A-share prospectus posted to the Shanghai exchange.

Mr. Ma’s Ant Group is asking buyers of what could be the world’s biggest-ever initial public offering to invest in the offer just days prior to the US presidential election.

The Chinese fintech giant will price the Shanghai part of its dual listing on October 27 and allow subscriptions on October 29, it said in a prospectus published on Wednesday. The deadline for payments will be November 2. Ant hasn’t yet spelled out dates for the Hong Kong leg of the IPO, but they’re likely to be similar.

While the company’s share sale is among the most hotly anticipated deals in years, the timeline will leave investors in a potentially precarious position: locked in throughout a pivotal week for global markets. Shares will almost certainly start trading only following the US vote on November 3, an event that could have big ramifications for both Ant’s overseas expansion plans and investor risk appetite generally.

Ant won regulatory approval for its Shanghai listing on Wednesday. It’s likely to raise about $35bn from the dual listing, surpassing Saudi Aramco’s record $29bn sale last year, people familiar with the matter have said.

An Ant representative declined to comment.

The company will issue no more than 1.67 billion shares in China, equivalent to 5.5 % of the total outstanding before the so-called greenshoe option, according to its prospectus on the Shanghai stock market. It'll issue the same amount for its Hong Kong offering.

Ant’s Shanghai shares will be listed beneath the ticker “688688,” based on the prospectus. Alibaba will hold about 32 % of Ant shares after the IPO.

Stong demand in the IPO means Ant may fetch a valuation equal to Bank of America and Goldman Sachs combined, despite concern that rising geopolitical risks could hamper the Chinese company’s international ambitions.