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Thursday, Oct 22, 2020

Ant Group's Chinese IPO could be among the biggest in history

Ant Group's Chinese IPO could be among the biggest in history

Chinese billionaire Jack Ma could be about to pull off a record-breaking IPO for the second time.
Ant Group, the financial affiliate of Ma's e-commerce company Alibaba (BABA), filed this week to list its shares in Hong Kong and on Shanghai's Star Market, China's Nasdaq-like tech board.

The company is reportedly seeking to raise $30 billion, according to the Financial Times and Reuters, citing people close to the process or with knowledge of the matter.

Ant Group did not disclose how much it hoped to raise, and a spokesperson declined to comment on the matter.

But the company could be worth more than $200 billion, according to analysts at brokerage firm Bernstein, and if it rakes in $30 billion, it would become the largest IPO in history. Alibaba, which has a 33% stake in Ant, raised a record $25 billion when it debuted on Wall Street in 2014. That number has only been surpassed by Saudi Aramco, which raised $29.4 billion in its Riyadh IPO in December 2019.

The documents Ant filed to the Hong Kong Stock Exchange on Tuesday did not mention the price range of the new shares, nor the expected date of the IPO. But they did offer a look under the hood at one of the world's most valuable tech companies.

The company reported revenue of 72.5 billion yuan ($10.5 billion) for the six months ended in June, up 38% from the same period a year earlier. Profit for the period was 21.9 billion yuan ($3.2 billion).

Ant owns Alipay, one of the most popular payment apps in China, and also offers online financial services such as loans, investments and credit scoring systems. Alipay has 711 million monthly active users, Ant reported, and processed some 118 trillion yuan ($17 trillion) worth of transactions in the 12 months ended in June.

The Hangzhou-based company's decision to IPO in Hong Kong and Shanghai comes as relations between the United States and China are rapidly deteriorating.

An escalating tech war between Washington and Beijing has resulted in sanctions and threats against big Chinese tech companies. President Donald Trump recently issued executive orders that would ban transactions with TikTok and WeChat, apps owned by Chinese companies ByteDance and Tencent. Trump also ordered ByteDance to sell TikTok's operations in the United States. TikTok has sued the Trump administration over the threatened ban, calling the order "heavily politicized." Tencent has said it is reviewing the WeChat order.

The Trump administration has also indicated that it could even go after Alibaba.

Ant Group cited the executive orders and the potential for more US sanctions as risks to its business.

Restrictions that may be imposed by the United States in the future "may materially and adversely affect our ability to acquire or use technologies, systems, devices or components that may be critical" to Ant Group's business, the company warned.

Recent US sanctions against Huawei, for example, have cut off the Chinese tech firm's access to semiconductors and advanced chips. Analysts called the move a "lethal blow" and a "death sentence" for Huawei.
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