Beijing hopes the company’s decision to sell 1.67 billion shares in both Hong Kong and Shanghai, or about 11% of the company in total, will attract the seasoned institutional investors it has long courted. If the price of shares is any indication, that strategy appears to be working.
Powerful tech giant
Mirroring Ma’s success with Alibaba, Ant has quickly grown into most powerful tech companies in the world. It has established its presence in every aspect of financial life in China, from investment accounts and micro savings products to insurance, credit scores and even dating profiles.
The company’s payments app Alipay had 731 million monthly active users as of September, Ant said in regulatory filings. The platform handled 118 trillion yuan ($17.7 trillion) in payments in the 12 months through June.
The company said revenue for the nine months ended in September rose about 43% to 118.2 billion yuan ($17.7 billion) compared to the same period last year. Gross profit for the period rose 74% to 69.5 billion yuan ($10.4 billion).
“Ant is being viewed as this national technology champion — it’s investing in AI, it’s investing in blockchain,” Lu said. These are priorities for Chinese President Xi Jinping, she added.
Geopolitical considerations have already been a major background factor in Ant’s IPO.
A growing number of Chinese companies have been seeking refuge on national exchanges as tensions between Washington and Beijing ramp up, and Ant’s success could encourage more firms to follow suit, according to Brock Silvers, chief investment officer at Kaiyuan Capital and former chief investment officer at Adamas Asset Management.
US threats and restrictions against Chinese tech companies such as Huawei, TikTok and WeChat have sent a clear warning, while scrutiny of Chinese firms on Wall Street is rising.
Luckin Coffee was kicked off the Nasdaq following the disclosure of major accounting irregularities. US lawmakers, government agencies and stock exchanges have since taken steps aimed at limiting Beijing’s access to America’s vast capital markets.
This environment is likely a major reason Ant chose to list on exchanges in Shanghai and Hong Kong, rather than follow Alibaba to Wall Street. In the long run, that could benefit China, directing money to its markets as investors rush to snap up Ant shares.
The shares are due to start trading in Hong Kong on November 5. The listing will push the market capitalization of the Shanghai Stock Exchange close to that of the Tokyo Stock Exchange, according to Lu.