Ant Group gets green light for Shanghai listing as part of blockbuster IPO

September 18, 2020.

Chinese fintech cleared a key hurdle for its blockbuster initial public offering Friday when a committee approved its proposed listing on the Shanghai Stock Exchange’s STAR Market.

The company is reportedly seeking to raise a record-breaking $30 billion when it debuts on the Shanghai and Hong Kong exchanges. 

The Shanghai listing committee also inquired about Ant Group’s relationship with Chinese e-commerce company Alibaba Group, the approval document shows. IPO paperwork shows that Alibaba’s co-founder, Jack Ma, has controlling voting power over Ant Group, while the fintech also has a 33% stake in the e-commerce company. Additionally, the fintech has noted that its unit was once part of Alibaba before being spun out in 2011.

Ant Group has several remaining steps before its IPO, Nikkei Asian Review reported. The news outlet noted that the company must still get approval for its Hong Kong listing, which it said will undergo review next week; it must also secure registration approval by the ; begin preliminary marketing following the approvals; and make its stock offering available to subscribers, which will likely happen between Oct. 1 and Oct. 8 to coincide with China’s National Day holiday.

A spokesperson for Ant Group declined to comment on what the company’s next steps are following the Shanghai approval.

The fast-growing company first disclosed its IPO plans in July. Ant Group filed detailed paperwork with both the Shanghai and Hong Kong exchanges in August, which included details of its revenue mix by business segment, along with strong overall top-line and bottom-line growth. Details presented show that Ant Group’s payments segment, which is its oldest and formerly its largest by revenue, has been overtaken in top-line share by its digital finance technology platforms segment. The latter segment includes the company’s credit, investment and insurance businesses.

The fintech’s progress toward its IPO comes days after the People’s Bank of China unveiled new governance and capital regulations that will affect the company starting on Nov. 1. Ant Group was among the companies the central bank mentioned specifically in a briefing on the rules. 

One of the regulations defines a financial holding company as either an entity that controls at least two financial institutions and has banking units with assets above CNY 500 billion ($73.87 billion) or an entity that lacks banking units but has financial assets above CNY 100 billion ($14.77 billion). The regulation also eyes entities with 85% of their total assets as financial assets, as licensing for them will be considered.

The PBOC’s other regulation, which it also released Sunday, covers capitalization, which requires financial holding companies to have registered paid-in capital at or above CNY 5 billion ($738.66 million) and that its amount cannot be below half of their controlled financial entities’ own capital.

-- Additional reporting by Minyoung Park