Banks Working on Ant Group’s Hong Kong IPO Could Get $396 Million Windfall

Julia Cristina Silvi Fioretti

28 Oct 2020, 03:09 AM IST

(Bloomberg) -- The banks working on the Hong Kong leg of Ant Group Co.’s record-breaking initial public offering are looking at a windfall of as much as $396 million, although in percentage terms it is less than the city’s average for big deals.

Ant is set to raise as much as $19.8 billion in Hong Kong if it fully exercises an over-allotment option. The fintech giant disclosed in a filing that it will pay an underwriting commission of as much as 1% of the total deal size, or $198 million. That’s below the average 1.45% paid by companies raising over $1 billion in the city, according to data compiled by Bloomberg.

The final percentage, however, will only be decided around Oct. 30, meaning the banks could end up receiving less. How the fees get split among the banks will also be decided later, though typically the sponsors take the lion’s share. That puts Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley and China International Capital Corp. in line for the biggest portion.

Part of the $396 million will come from investors, who pay a 1% brokerage fee when buying shares.

An Ant representative declined to comment.

The only other IPO that is bigger than Ant in Hong Kong, AIA Group Ltd.’s $20.4 billion offering in 2010, paid banks 1.75%. Budweiser Brewing Co APAC Ltd. rewarded them 1.5% of its $5.76 billion listing last year, while smartphone maker Xiaomi Corp. forked out 1%.

Alibaba Group Holding Ltd. only paid banks 0.25% for its $12.9 billion second listing in Hong Kong last year, well below the average. However, such offerings tend to pay less, because, the argument goes, investors are already familiar with a company trading on another exchange. NetEase Inc. also disclosed an underwriting fee of 0.25% for its Hong Kong share sale, while JD.com Inc. paid 1%.

Still, if Ant were to end up paying less than 1%, that would put it more in line with secondary listings like Alibaba’s as opposed to traditional IPOs.

UPCOMING LISTINGS:

Ant Group
- Hong Kong, Shanghai
- Size $35b
- H.K. books close Oct. 29, listing Nov. 5
- Shanghai subscription on Oct. 29
- Citi, JPMorgan, Morgan Stanley, CICC
GDS Holdings
- Hong Kong stock exchange
- Size $1.67b
- Pricing Oct. 27, listing Nov. 2
- JPMorgan, Bank of America, CICC, Haitong
JW (Cayman) Therapeutics
- Hong Kong stock exchange
- Size up to $300m
- Pricing Oct. 28, listing Nov. 3
- Goldman Sachs, UBS
Lufax Holding
- NYSE
- Size up to $2.36b
- Pricing Oct. 29
- Goldman Sachs, Bank of America, UBS, HSBC, China PA Securities
RemeGen
- Hong Kong stock exchange
- Size up to $515m
- Pricing Nov. 2, trading Nov. 9
- Morgan Stanley, Huatai International, JPMorgan
Jiayuan Services
- Hong Kong stock exchange
- Pre-marketing Oct. 21-28
- Haitong, Guotai Junan
Sunac Services
- Hong Kong stock exchange
- Size about $1b
- Pre-marketing from Oct. 27
- HSBC, Morgan Stanley
Radiance Holdings
- Hong Kong stock exchange
- Size $333m
- Listing Oct. 29
- ABC International, CLSA, Haitong
KWG Living Group
- Hong Kong stock exchange
- Size $390m
- Listing Oct. 30
- ABC International, Huatai International
Shimao Services
- Hong Kong stock exchange
- Size $1.3b
- Listing Oct. 30
- CICC, Morgan Stanley
Nanofilm Technologies
- Singapore stock exchange
- Size $345m
- Listing Oct. 30
- Citi, CLSA, Credit Suisse

More ECM transactions we are following:

Jack Ma’s Ant Group Co. is set to raise about $34.5 billion through initial public offerings in Shanghai and Hong Kong, a blockbuster listing that will rank as the biggest IPO ever and make it one of the most valuable finance firms on the planet.
Ant is planning to stop taking investor orders for the Hong Kong leg of its initial public offering a day earlier than scheduled as the share sale has already been heavily subscribed, according to people familiar with the matter.
Mr. D.I.Y. Group Bhd. rose on the first day of trading after Malaysia’s biggest home-improvement retailer was oversubscribed about four times this month.
Shares of Converge Information and Communications Technology Solutions Inc., a high-speed fixed broadband operator in the Philippines, slipped in their first day of trading following the company’s 25.3 billion peso ($523 million) initial public offering.
RemeGen Co., biopharmaceutical firm, offers 76.5m shares at HK$50.30-HK$52.10 apiece in its Hong Kong initial public offering, according to the terms for the deal obtained by Bloomberg News.
Data center company GDS Holdings Ltd. is set to raise HK$12.9 billion ($1.67 billion) in its Hong Kong second listing, according to people familiar with the matter, following in the steps of other U.S.-listed Chinese firms in seeking a trading foothold closer to home.
Sunac Services Holdings, the property management arm of Chinese real estate developer Sunac China Holdings, plans to begin gauging investor interest for its Hong Kong IPO, according to terms seen by Bloomberg.