The highest-valued Fintech company, Ant Group’s founder, Jack Ma, released the news on Saturday to Bund Summit in the eastern financial hub of Shanghai, that “It’s the first time that the pricing of such a big listing – the largest in human history – has been determined outside New York City,”. He referred to the event as being a “miracle”.
Ma went on to talk about the current banking system being offered to small businesses and individuals. Being the master of innovation himself, he pointed out how financial and regulatory systems act as an obstacle in the process of innovation. The purpose of the Ant Group itself has been to work towards enabling individuals and small businesses to access financial services through the integration of technology.
Jack Ma warned that the global system established after World War II is outdated and too reluctant towards risk-taking, pointing that risks were stockpiling in the whole economy. He further went on to call the Basel Committee on Banking Supervision “an old men’s club”.
The founder also said that in China, by and large, banks still demand collateral and guarantees before choosing to lend, depicting a “pawnshop” mentality. This model would fail to power future growth, he said. Instead of this, he suggested that a universal banking system based on big data would lead to inclusivity in lending to small businesses and individuals.
The firm plans to list simultaneously in Hong Kong and on Shanghai’s STAR Market. The fintech giant plans to raise up to $17.3 billion in the Shanghai leg of the whole $35 billion dual listing. Ma said that the pricing of the Shanghai tranche was decided on Friday, however, he did not disclose it.
Later on Saturday, a source told Reuters that large investors had submitted bids for Ant shares at close to 69 yuan or $10.32 per share. At this price, the company could raise as much as 115.3 billion yuan or $17.3 billion in the Shanghai tranche alone. This would increase the value of the company as a whole up to 2.1 trillion yuan or $314 billion before a 15% greenshoe or over-allotment option could be exercised.
The massive IPO would lead to an increase in the status of the Shanghai exchange, especially during the times of rising tensions between the US and China about the future of listing Chinese companies in New York.
For the Shanghai tranche, books of the float will be opened on October 29 for one day. Ant aims to sell around 1.67 billion shares in the Shanghai float, breaking the earlier record of $10.1 billion set by Agricultural Bank of China in 2010, according to Refinitiv data.
80% of the Shanghai float would be made up by strategic investors, locking up their investments for a period of at least 12 months. According to Ant’s updates prospectus, 44% of the Shanghai float has been committed to being purchased by the Zhejiang Tmall Technology which is a unit of Alibaba.
The official announcement of the pricing is expected to be next week.
As for the Hong Kong leg, according to some sources, the books may be opened as soon as Monday with the pricing announced in the coming days. The shares are expected to start trading after a few days following the US presidential election and could lead to volatility in the market.