Ant Group's Shanghai retail book for $34.4 billion listing 872 times oversubscribed
The domestic retail book of Ant Group Co Ltd’s $34.4 billion dual listing was 872 times oversubscribed as individual investors in China scrambled for a slice of the world’s largest initial public offering (IPO), a company filing showed. Ant is poised to raise about $17.2 billion on Shanghai's STAR Market and roughly the same in Hong Kong, shattering the record set by Saudi Arabian Oil Co (Saudi Aramco) with its $29.4 billion listing last December.
Investors are rushing to buy into the fast-growing Chinese fintech firm, which operates the country’s biggest payments platform and other financial services, despite risks of greater scrutiny at home and abroad. Hangzhou-based Ant, backed by e-commerce behemoth Alibaba BABA.N, has decided to exercise a so-called greenshoe option for a 15% over-allotment of shares, now selling 1.92 billion shares on the Nasdaq-style STAR Market, according to Ant's filing with the Shanghai exchange on Thursday. After the greenshoe, the oversubscription equates to retail investment interest of about 19 trillion yuan ($2.83 trillion).
The company on Monday set the price of the Shanghai leg at 68.8 yuan ($10.27) per share. Before the greenshoe, it was offering 4% of the initial 1.67 billion shares to mainly retail investors across the country, having earmarked 80% of the domestic offering to 29 strategic investors who will be locked up for at least one year. The remaining 16% of the Shanghai leg had been allotted to non-strategic institutional investors who subscribed for about 76 billion shares, roughly 284 times the initial tranche, according to Ant’s filing on Monday.
The enthusiastic retail investor sentiment towards Ant’s record-setting float has triggered a clawback mechanism where heavy oversubscription from small investors can result in them receiving a greater share, Ant said in the latest filing. After the greenshoe and clawback, the final allocation of the deal is about 70% to strategic investors and the remainder split 12-18% between institutional and retail investors, instead of 16%–4% as originally planned, as per the latest filing. Ant opened books for the Shanghai float for one day on Thursday. Investor demand is also strong for the Hong Kong leg, with Ant closing institutional order books one day earlier than planned.
The book was oversubscribed just one hour after launch on Monday, with the float stoking heavy demand for local currency and sending Hong Kong money market rates to five-month highs. Strong demand is also expected for the 41.76 million shares, being offered to retail investors in Hong Kong, representing 2.5% of shares being offered locally.
The prospectus shows the total amount will be increased to 167.1 million shares, or 10% of the Hong Kong offering, if the initial retail allocation is more than 20 times oversubscribed.
https://www.reuters.com/article/ant-group-ipo/update-2-ant-groups-shanghai-retail-book-for-34-4-bln-listing-872-times-oversubscribed-idUSL1N2HK10C