It has become the largest IPO in history—and by quite a margin. Consider that at $2 trillion, the Saudi Aramco IPO was the previous record holder. Now, Jack Ma’s Ant Group Co Ltd has surpassed that by a whole trillion dollars—that is one followed by 12 zeroes.
Retail investors placed bids for a record $3 trillion of shares into Ant’s dual listing, on both the Shanghai STAR Market and in the Hong Kong exchange. This saw the Shanghai and Hong Kong legs oversubscribed by 872 and 389 times the shares on offer. The over $3 trillion of bids is more than the estimated GDP of India in 2019.
Ant hopes to raise at least $35 billion when the share starts trading on November 5.
But what were people investing in? What has driven this hype is Ant’s grip on the digital payments market in China—the Ant Group owns China’s largest digital payment platform, Alipay, which has over one billion users and 80 million merchants. As China makes giant strides towards becoming a cashless society, and with COVID-19 necessitating a decline in the importance of cash, digital payment platforms like Alipay have grown in importance.
It’s not just digital payments on offer. AliBaba, which owns 33 per cent of Ant, wants to aggregate its services to turn Alipay into a ‘superapp’. Alipay offers everything from credit to being the definitive COVID-19 health tracker in China—a green health code was a sought-after status as it could be scanned by authorities and was necessary for local travel and entry into many places.
AliPay has prospects in China’s fortcoming digital currency as well as well. The impending ‘digital yuan’ will reportedly be compatible with AliPay, working with its systems (as well as with those of rival WeChat Pay’s) and not in competition with it. For AliPay, the de facto mobile wallet in China, this means an assured hold on what could well be the future of currency in China.
Driving enthusiasm for the IPO was a shaky global market, with a second wave of infections rapidly spreading across Europe and prompting a new wave of lockdowns, coupled with the looming US elections and the uncertainty it brings, pushing investors to the seemingly safe bet that is Ant.
Ant made a net profit of $2.6 billion in 2019. In the first 10 months of 2017 alone, AliPay processed $17 trillion of transactions in mainland China.
However, Ant may not have a completely smooth run. China is mulling an antitrust probe into both AliPay and WeChat, Reuters reported in July this year.