This Ant Will Be an Undisputed Market Heavyweight
The mascot for Ant Financial Services Group stands on display in Shenzhen, China. (Photographer: Qilai Shen/Bloomberg)

This Ant Will Be an Undisputed Market Heavyweight

Jack Ma’s Ant Group has filed for an initial public offering in Hong Kong and Shanghai, in what is likely to be one of the biggest debuts in years, potentially topping even Saudi Aramco’s $29 billion initial share sale in 2019.

The listing of China’s largest online payments platform, which is a third-owned by Alibaba Group Holding Ltd., has been keenly awaited for at least three years. Ant is targeting a valuation of about $225 billion, based on an IPO of about $30 billion if markets are favorable, people familiar with the matter told Scott Deveau and Lulu Yilu Chen of Bloomberg News last month.

Ant says it will use the proceeds to expand cross-border research and enhance its research and development capabilities. The filing shows the company had transaction volume totaling 118 trillion yuan ($17 trillion) in the 12 months ended in June, with 1 billion users and 80 million merchants offering the Alipay app.

Here’s what Bloomberg Opinion columnists have been saying about the company:

Ant Will Have an Elephant-Sized Coming Out Party:  With one swoop, the dual listing will invigorate Shanghai's technology-focused Star board and provide some welcome market buzz for Hong Kong. Chinese regulators held back approval for Ant to go public out of concern that the company had become too dominant. These concerns have since been assuaged. The regulatory push has turned Ant into more of a platform than a seller of its own proprietorial products. It now supplies digital infrastructure to financial institutions rather than competing with them. By last year, the company drew half its revenue from local merchants and finance firms, and forecasts that to rise to more than 80% in five years. — Nisha Gopalan

Is Alibaba Ready to Show China’s Subprime Books: Billion-dollar initial public offerings are encouraging news for market sentiment. But we can’t help but wonder: Is this really a good time to celebrate their success, when tension between the U.S. and China is escalating into a war for capital?  For most of 2017, consumer micro lending was a lucrative business for Ant, accounting for almost 20% of the group’s income, Bernstein Research estimated. But the cash cow’s milk turned sour that December, when Beijing suspended all unsecured online cash loans. These IPOs will expose the true state of millions of consumer balance sheets. — Shuli Ren and Anjani Trivedi

A Bullish Alibaba Will Depend on Ant’s Bottom Line: Ant Group’s imminent initial public offering promises to make a lot of people rich, including founder Jack Ma and existing shareholders of Alibaba Group Holding Ltd. Yet the real benefit to Alibaba is not in the appraisal of its affiliate’s stock, which could fetch a valuation of $200 billion upon listing in Hong Kong and Shanghai, but in the ongoing earnings the financial services company will keep feeding the e-commerce giant. — Tim Culpan

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Brooker is an editor with Bloomberg Opinion. He previously was a columnist, editor and bureau chief for Bloomberg News. Before joining Bloomberg, he worked for the South China Morning Post. He is a CFA charterholder.

©2020 Bloomberg L.P.

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