Ant Group to launch Shanghai IPO as capital to flow in safe zones like China

By GT staff reporters Source: Global Times Published: 2020/9/18 23:03:40

More capital to flow into pandemic-proof safe zones like China


Three decades after stock trading became available in the Chinese mainland, the nation's expanding financial-savvy population is finally close to embracing a blockbuster IPO that could match the economy's rising clout in the tech world, thanks to trend-defying efforts to broaden access to its financial market.

Chinese fintech giant Ant Group is a step closer to being traded in the mainland stock market, after gaining regulatory approval on Friday for an IPO on the STAR Market in Shanghai.

The offering, part of a dual listing that could become the world's largest IPO of all time, underpins China's intrepidness in the face of a deepening financial war with the US, market watchers said. They expect the COVID-19 pandemic that could last for years to drive more capital into safe zones, notably China, where the pandemic is contained. 

In a statement on Friday, the listing committee of the STAR Market of the Shanghai Stock Exchange granted the listing. The committee required Ant Group to disclose specifics of the three main areas that funds raised by the IPO will go to - push for an upgrade in the digital economy, strengthen global cooperation, boost global sustainable development, and make further commitments to sci-tech innovation.

The fintech behemoth's Shanghai offering is expected as early as October, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Friday. 

Ant Group exemplifies rare but premium options in the A-share market, Dong said.

With the regulatory breakthrough, A-share investors who have long enjoyed a tech-enabled lifestyle but can't directly purchase shares in Alibaba, Baidu, Tencent, Meituan Dianping and Xiaomi - which typify the ubiquitous indigenous tech strength but have all opted for overseas listings - will soon be able to invest in these big tech names. 

The stock linkups between the mainland and Hong Kong bourses allow retail investors to trade some of the tech stocks listed in Hong Kong, but only a tiny portion of A-share investors satisfy the eligibility criteria, that require an aggregate balance of not less than 500,000 yuan ($73,910) in individual investors' trading accounts. 

Ant Group, the operator of Alipay, one of the two most popular mobile payment apps in China - the other one being Tencent's WeChat Pay - submitted its prospectus to the Shanghai Stock Exchange and the Hong Kong Exchange and Clearing simultaneously in late August.

The fintech unicorn - in which Alibaba Group holds a 33-percent stake - plans to offer 30 billion shares through its dual listing. The price range has yet to be revealed. 

The dual offering could raise as much as $30 billion—meaning, it's set to beat Saudi Aramco's record $25.6 billion IPO in late 2019, according to Li Yongsen, director of the institute of financial research at the University of the Chinese Academy of Social Sciences.

The forthcoming availability of Ant Group's A+H shares can be attributed to continued reforms to clear the regulatory roadblocks that have previously prevented homegrown big tech firms to list on their home turf, analysts said, citing the listing requirement loosening as regards earnings and firms adopting a unique investment vehicle, known as variable interest entity (VIE).

VIE structures are used by Chinese internet titans, including Alibaba, which enable them to access foreign capital, while sidestepping foreign shareholding restrictions in certain sectors such as the internet.

As the nation's capital market becomes increasingly open and inclusive, overseas institutions and international capital would flock into the market, elevating the role of A shares in global markets, Dong said.

157 firms have completed their IPOs in the Shanghai market so far this year, raising a total of 263.1 billion yuan, making the Shanghai bourse the biggest in the world as measured by IPO funding, an executive of the Shanghai Stock Exchange said on Friday. 

The negative list for foreign investment access to the financial sector, as part of special management measures for foreign business access, has been officially eliminated, Chen Yulu, deputy governor of the People's Bank of China, the country's central bank, said earlier in September during the China International Fair for Trade in Services.

More foreign investment and foreign institutions are moving into China's financial market in an orderly manner, he said.

The nation's effective virus containment that turns the economy into a safe zone for global capital is also considered of pivotal importance to quite Trump's China hawks who envision a purge of US-listed Chinese firms to let the US win the financial war without fighting. 

With the Chinese financial authorities continuing an unswerving push for two-way opening-up of the capital market, squarely the opposite of what their US counterparts are doing, Ant Group's record-making listing is becoming a reality in the Chinese market, not the US - a promised land that is being abandoned. 

A flurry of Chinese tech giants have set their eyes on the homeland, either planning an IPO in Shanghai or Shenzhen, or preparing for a listing in Hong Kong.

JD Digits, the fintech affiliate of Alibaba rival, has filed for an IPO on the STAR Market. Kuaishou, the Chinese short video app rivaling the besieged TikTok, is reportedly pursing an IPO in Hong Kong. 

In another fresh move, Chinese classifieds site announced that it requested to suspend trading of its American depositary shares on the New York Stock Exchange as of Friday as it completed a merger with Quantum Bloom Company, according to a statement sent to the Global Times on Friday.

Newspaper headline: Ant Group to launch Shanghai IPO


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