AliBaba going for new records with the ANT Group IPO

In one of China's largest IPOs ever, Alibaba's bulls can now bet on one of their most famous subsidiaries for just 5 cents a dollar. Over the past two years, President Trump's administration has put dozens of Chinese companies on the dreaded entity list, essentially preventing these companies from doing business in the United States. The latest victims are the video app TikTok and the messaging app WeChat, although US courts have managed to prevent an impending ban on both apps. Interestingly, Trump has failed to put the brackets on a much bigger opponent: Alibaba Inc. (NYSE: BABA).

Alibaba has already made history after becoming the second largest public offering ever on U.S. soil, rivaling only Saudi Aramco's 2019 IPO. BABA still stands out for one reason: although Aramco's IPO raised a record $ 29.4 billion, which valued the company at a staggering $ 1.7 trillion, only 5% of the company is public, while Alibaba is a fully public company. But now Alibaba is about to outbid Amazon again. In fact, BABA's financial tech spin-off, Ant Group, the online payments provider for Alibaba Group, could even outperform Alibaba's own $ 25B IPO as it targets a record $ 35 billion when it hits the Hong Kong and Shanghai stock exchanges goes public. CNBC has confirmed that Ant Group has just received approval from China's Securities Commissioner for the Hong Kong portion of its upcoming IPO, which could see ANT valued north of $ 200 billion.

This is even more interesting: Hong Kong stockbrokers are desperate for this deal to happen, and are offering mommy-and-pop investors ANT stock at an extremely generous 20x leverage. Essentially, this means that retail investors only need a 5% cash deposit to subscribe to ANT, an offer only available from Bright Smart Securities & Commodities Group and UP Fintech Holding Ltd. is submitted. Ant Financial's double listing on the Hong Kong and Shanghai stock exchanges could raise at least $ 35 billion, although an IPO date has not yet been set.

Ant Financial Services Group, founded by the Chinese billionaire and chairman of the Alibaba Group, Jack Ma, has grown to become the world's largest financial services company, making products that allow people to use their mobile phones to pay for insurance or buy groceries. Jack Ma founded Alipay, a subsidiary of Ant Financial, in 2004 to provide Chinese customers who lacked credit and debit cards with an easy way to shop on the vast online marketplace. The platform just got stronger and now has 1.3B users.

As Alipay grew, Jack Ma discovered that banks were not doing nearly enough to support small businesses and began promoting them with small loans. In 2010, Alipay was spun off from Alibaba after authorities stated that the platform would need a new license to operate. Through 2013, Alipay held billions of dollars in escrow customer funds. It was around this time that the company came up with the idea of ​​investing unused customer funds in money market funds in order to generate an income.

The money market fund, known as Yu'e Bao for "Leftover Treasures," allows customers to invest from as little as 0.01 yuan ($ 0.0015). The fund pays interest rates several points higher than what banks pay on short-term deposits, which it can because its status allows it to invest in riskier products than what banks are allowed to tap. A boom in asset-backed securities issued by micro-lenders who package consumer credit into securities has fueled the company's growth.

China's banks, including the country's largest, were not happy with how events unfolded, complaining that Ant siphoned off their deposits and forced them to pay higher interest rates to attract deposits, even leading to the closure of branches and ATMs Has. A state television station famously described Amei's massive money market fund as a "vampire who sucks blood from the banks".