KEY POINTS

  • Ant Group will list on the Hong Kong and Shanghai markets
  • Retail investors have subscribed for Ant's shares in massive numbers
  • Hong Kong banks will make $396 mn in windfall profits from IPO: Report

The widely anticipated initial public offering of Chinese fintech giant Ant Group estimated around $34 billion next week, is seeing an investor interest like never before.

The retail portion of Ant’s concurrent listing in Shanghai attracted bids worth a record 19.05 trillion yuan, or about $2.8 trillion, exceeding supply by more than 870 times, Bloomberg reported.

Experts are predicting a first-day jump for Ant due to unprecedented investor attraction, but there may also be risks from the upcoming U.S. elections, the spread of COVID-19 and business regulations in China.

Ant is due to start trading on Nov. 5 through the largest IPO ever. The company will raise money on Hong Kong and Shanghai exchanges, underlining China’s ability to raise money on its own as U.S. scrutiny on Chinese-based businesses increases.

Ant’s IPO is attracting big players, including Temasek Holdings, T Rowe Price Group and UBS Asset Management. According to the fintech company’s prospectus, institutional investors will take up 96% of the offering in Shanghai and 97.5% in Hong Kong.

Meanwhile, 5.16 million retail investors have already subscribed for Ant’s shares in Shanghai, where traders must have a minimum of 500,000 yuan in their accounts, as per the report. In Hong Kong, retail investors are borrowing money from banks to put money on Ant, as interest rates are at record lows. Banks and brokerages in the city have lent as much as HK$519 billion so far of margin loans to retail investors, the report quoted the Hong Kong Economic Journal.

The blockbuster IPO’s price is surpassing average valuations for international payment companies and even big tech names listed in Hong Kong, Bloomberg data shows.

Ant Group, which controls mobile payment app Alipay, is minting money for parties involved in its IPO. It was reported recently that banks working in the Hong Kong listing for the company will make $396 million in windfall profits. Jack Ma, founder of Alibaba and owner of a one-third stake in Ant, will also get richer after the IPO. Early investors and employees will also earn fortunes from the listing.

Ant Group company runs Alipay, the dominant online payment system in China, where cash, cheques and credit cards have long been eclipsed by e-payment devices and apps Ant Group company runs Alipay, the dominant online payment system in China, where cash, cheques and credit cards have long been eclipsed by e-payment devices and apps Photo: AFP / Hector RETAMAL