Long line of investors for the upcoming Ant Group IPO

Ant Group Co Ltd <688688.SS> (HK: 6688) is poised to raise up to $ 34.4 billion in the world's largest public offering as investors move into the fast-growing, despite the risk of more scrutiny at home and abroad top Chinese fintech giants. The double listing, a first for Shanghai's Nasdaq-like STAR market and Hong Kong, would value Ant at around $ 312 billion before introducing a greenshoe option for a 15% over-allotment of shares. On this valuation, Ant is worth more than the Industrial and Commercial Bank of China (SS: 601398), which is the largest bank in the world by assets.

The money raised will also break the record set by the oil multinational Saudi Arabian Oil Co (Saudi Aramco) (SE: 2222) with its listing of 29.4 billion dollars last December. Jack Ma, the billionaire founder of Ant and its subsidiary Alibaba Group Holding (HK: 9988) (N: BABA), said it was a "miracle" that such a large listing is happening outside of New York City. Ant's nascent market debut had been tarnished by concerns about growing regulatory scrutiny of its lucrative home consumer credit business, as well as a US State Department proposal to blacklist the company.

However, global investors have largely allayed these concerns as they count on the continued rapid growth of a group that also operates China's largest mobile payments platform and sells wealth management and insurance products. "The fear of missing out on something and the lack of other opportunities of this caliber," said Justin Tang, head of Asia research at investment advisor United First Partners in Singapore, has piqued investors' interest in the IPO. Ant's order books for the Hong Kong institutional offering were oversubscribed an hour after launch, said two people with direct knowledge of the matter. Many potential investors have placed orders worth at least $ 1 billion in the first hour, one of the sources said, adding that institutional orders could reach around 1,000. Ant declined to comment on investor demand. Ant, based in the Chinese city of Hangzhou, plans to raise about $ 17.2 billion in Shanghai and about the same amount in Hong Kong. The group has allocated 80% of its domestic offering to 29 strategic investors, who will be on hold for at least one year.

A wholly owned Alibaba unit has agreed to buy 44% of the shares in Shanghai. Other strategic investors in Shanghai include the Chinese National Council for the Social Security Fund, a unit of the Singapore state investor Temasek Holding, the GIC state funds from Singapore and Abu Dhabi and the Abu Dhabi Investment Authority. Large Chinese insurers and mutual funds will also be allocated shares through the strategic investor, as the registration on Monday showed. The ant shares are expected to start trading in Hong Kong and Shanghai on November 5th, two days after the US election.

The company set the price for the Shanghai portion of the listing at 68.8 yuan ($ 10.27) per share and HK $ 80 ($ 10.32) per share for the Hong Kong tranche, according to the exchange filings. The price represents a multiple of 31.4 times Ant's profit in 2021 and 24.2 times its profit forecast for 2022, said a source with direct knowledge of the matter. For comparison, Alibaba trades 34.28 times Hong Kong's 12-month revenue. Ant declined to comment on the course multiples. The group's listing in China would dwarf the record set by the Agricultural Bank of China (OTC: ACGBF) (SS: 601288) in 2010 of $ 10.1 billion. The Hong Kong record was set by insurance company AIA's $ 20.5 billion bid in 2010.

The bookbuilding for the Hong Kong route runs Monday through Friday, while the books for the Shanghai route are open for one day on Thursday. Ant's IPO would also serve to polish STAR's status. The companies raised $ 22.5 billion through initial public offerings and secondary listings on STAR between the beginning of the year and mid-October, making the exchange the third-largest stock market behind the Nasdaq and Hong Kong, refinitive data shows.