Ant’s IPO isn’t coming to the New York Stock Exchange

Ant’s IPO isn’t coming to the New York Stock Exchange
Written by:
Jayson Derrick
September 9, 2020
  • Ant Financial will list its stock in China and Hong Kong exchanges.
  • Ant was founded by billionaire Jack Ma who is also a brainchild of Alibaba.
  • The Chinese fintech giant could be worth more than $200 billion.

China-based Ant, formerly known as Ant Financial, will list its stock in Hong Kong and Shanghai exchanges, instead of New York where its sister company Alibaba Group Holding (NYSE: BABA) trades, The Wall Street Journal reported.

What is Ant?

Ant’s roots trace to its early days as the exclusive payment provider for Ma’s Alibaba. The financial services company has since been spun off to its own entity in 2014. Alibaba still owns a 33% stake in Ant and the company told WSJ in a statement it remains an “important member” of Alibaba’s digital economy. As such, investors can indirectly own a piece of Ant by buying Alibaba’s stock.

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Today, Ant is considered one of the most valuable startups in the world and will raise more cash through a listing on China’s NASDAQ-exchange rival STAR and on Hong Kong’s exchange.

Ant was valued at $150 billion during a mid-2018 fundraising push but sources familiar with the company told WSJ the Chinese company could be worth more than $200 billion. The company is backed by more than 900 million active users in China. The Ant mobile app can be used to pay for groceries, utility bills, and even for online investing.

Ant also provides small business and consumer lending products and oversees money market mutual funds.

If Ant looks to sell 10% to 15% of itself to outside investors, the upcoming IPO could prove to be one of the largest of its kind. In fact, Alibaba held the title as overseeing the largest IPO in history when it raised $25 billion. It was overtaken by Saudi Aramco’s listing last year which implies Ant could rank as third in history.

Ant is looking to raise cash to “accelerate its goal of digitizing the service industry in China.”

By overlooking American stock exchanges, Ant’s listing in the new STAR market and in Hong Kong will help elevate the reputation of the two Asian exchanges. Global investors are likely to want a piece of the Ant IPO, especially since the company is already profitable.

Political tensions

Tensions between Washington and Beijing are fragile at best. The U.S. Senate passed legislation earlier in 2020 that would force Chinese companies to delist from an American exchange if their audit documents aren’t reviewed by U.S. regulators for three consecutive years.

Also, China introduced new national security laws impacting Hong Kong’s pro-democracy protests by criminalizing secessionists, subversive, and terror activities, according to WSJ.

Regardless, American money managers for the most part have easy access to the Hong Kong market and some retail brokers let individual investors buy shares in the Asian market.