Chinese financial technology group Ant has unveiled plans for an IPO that could raise a record $ 30 billion (£ 23 billion).
The company, affiliated with online shopping giant Alibaba, said it would sell shares in Hong Kong and Shanghai.
The announcement comes amid mounting tensions as the Trump administration cracks down on Chinese companies.
Although many in the West have not heard of Ant, he is best known in China for the mobile payment powerhouse Alipay.
What is Ant Group?
Based in the Chinese city of Hangzhou, Ant was launched in 2004 by e-commerce giant Alibaba and its founder Jack Ma.
Since then, Alipay has become the main mobile payment business in China.
In addition to mobile payments, more than 700 million people per month and 80 million businesses use the service to pay their bills, purchase insurance, and invest in mutual funds.
Meanwhile, Alibaba, which owns a 33% stake in Ant, is increasingly integrating its services into the Alipay app.
David Dai, senior analyst at Bernstein Asset Managers in Hong Kong, told the BBC why the company is such a big player in China’s digital payments industry.
“With Tencent, Ant processes some 200 trillion RMB (£ 22.5 billion; $ 28.8 billion) in payments and transfers per year. That’s more volume than Visa and Mastercard combined. ”
But, according to the company’s online profile, it’s not size that matters, it’s longevity: “We’re not looking for size or power; we aspire to be a good company that will last 102 years.
How big could the stock sale be?
While Ant’s announcement did not disclose its valuation of the company or how much it expects to rise when it debuts on the stock market, analysts estimate the company is worth as much as $ 300 billion. That would give it a higher valuation than most of the biggest US banks.
“I expect Ant to hit a market cap of $ 250 billion to $ 300 billion. Compare that with Citigroup which I think is a little over $ 100 billion. The world’s largest financial institutions are now in China, ”said Shaun Rein of China Market Research Group. BBC.
With the company expected to sell shares corresponding to a stake of between 10% and 15%, it could be the largest initial public offering (IPO) in history.
“Ant will be raising around $ 30 billion and I think it will be the biggest IPO in the world, beating Saudi Arabia’s Aramco last year which went public just north of $ 29 billion,” he said. added Mr Rein.
Why is the location of the IPO important?
Ant Group plans to debut on the Star board market of the Shanghai Stock Exchange, which is considered the Chinese equivalent of the US Nasdaq, and the Hong Kong Stock Exchange.
Although the company did not explain why it chose these exchanges, it should be noted that it did not choose to list in the United States or in any of the major European financial centers.
The announcement came at a time of growing tensions between Beijing and Washington over a range of issues, including China’s handling of the coronavirus pandemic, Hong Kong’s security law and their ongoing trade dispute.
The Trump administration recently stepped up its attacks on Chinese tech companies in the United States when the president signed two executive orders to ban the TikTok video-sharing app and the WeChat messaging platform.
Bao Vu, chief investment officer at RE Lee Capital, told the BBC why Ant choosing Shanghai and Hong Kong is a major victory for the Chinese financial services industry: “The location of the listing is very important to the ambition of China to have an alternative to American stock markets. . ”
“If the listing is successful, it would pave the way for other tech companies to register outside of the United States, which is the only real alternative at the moment,” he added.