Chinese fintech Ant Group plans dual Hong Kong-Shanghai IPO

July 20, 2020.

Chinese fintech , which is controlled by Alibaba Group co-founder Jack Ma, said on Monday that it will have an initial public offering in both Hong Kong and Shanghai.

The company, whose businesses include the popular mobile payment network , said that its shares will be listed on The Stock Exchange of Hong Kong and on the Shanghai Stock Exchange’s STAR board.

“The listings will help the company accelerate its goal of digitizing the service industry in China and driving domestic demand, as well as position the company to develop global markets with partners and expand investment in technology and innovation,” Ant Group said in its statement.

Ant Group is seeking a valuation of more than $200 billion, according to reports in Bloomberg and Reuters. An external spokesman for Ant Group declined to comment beyond the company’s announcement.

“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators,” Eric Jing, Ant Group’s executive chairman, said in a statement. “Through our commitment to serving the under-served, we make it possible for the whole of society to share our growth,” 

Alibaba detailed Ant Group's history in its most recent annual report, noting that Alipay was formed in 2004 to run its payment services business. Alipay was then spun out of Alibaba in 2011 as part of an effort to receive a payment business license in China; its investor base was switched into an entirely domestic one to make getting a license easier. 

After the spinoff was done, the ownership structure of Alipay’s parent entity, Ant Group, was changed so that Jack Ma held a substantial majority of the equity ownership interest in Ant Group, according to Alibaba’s report.

Ant Group has gone through different previous names, including , which it assumed in 2014, and Small and Micro Financial Services Company before that.

Alibaba said that Ant Group currently offers payment and financial services to both its merchants and customers.

Last September, Alibaba received a 33% stake in Ant Group in exchange for ending a profit-sharing arrangement, the report said. Ma currently has approximately 50% effective voting control of Ant Group, Alibaba said. The company explained that this is due to Ma having the voting power of two entities with economic interests in Ant Group, Junhan and Junao, as he has full ownership of their shared general partner. The entities held a combined stake in Ant Group of about 50% as of March 31, Alibaba said. Ma also still has an economic interest in Ant Group, although Alibaba co-founder Simon Xie, along with Alibaba and Ant Group employees, also have interests, Alibaba said.

The selection of Hong Kong and Shanghai means that Ant Group will not have a listing in New York, in contrast to Alibaba, which has a listing on the New York Stock Exchange in addition to Hong Kong. 

The news comes amid rising tensions between the U.S. and China. Last week, President Donald Trump signed the Hong Kong Autonomy Act, a new federal law that authorizes sanctions “on foreign persons, entities, and financial institutions that contribute to China’s actions to remove autonomy from Hong Kong.” 

The law was introduced in response to China’s recently adopted national security law governing Hong Kong, which severely restricts civil liberties in the city. China has vowed to retaliate with its own sanctions against U.S. companies.

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