How to invest in the Ant Group IPO

Posted: 5 November 2020 2:39 pm
News

Everything you need to know about the suspended initial public offering.

What was supposed to be the biggest IPO in history has hit a wall of red tape.

Chinese fintech giant Ant Group (formerly called Ant Financial) operates Alipay, the world’s largest digital payments platform. Due to list Thursday 5 November on Hong Kong and Shanghai Stock Exchanges, the IPO was halted after its co-founder Jack Ma and other executives were called into a meeting with Chinese regulators.

Here's everything we know so far about the record-breaking listing, including how you can invest if you're from Australia.

What we know about the Ant Group IPO

Hangzhou-headquartered Ant Group planned to go public through a parallel listing on Hong Kong and Shanghai stock exchanges. This Alibaba affiliate intended to raise as much as US$37 billion through its dual-listing. If successful, the listing would break world records for the largest IPO to date, surpassing the current record holder, Saudi Aramco.

Ant Group planned to evenly split its offerings between the two exchanges, with up to 1.67 billion shares up for grabs on each, accounting for 11% of total outstanding shares. If successful, Ant Group would be worth as much as US$3 trillion, on par with the United Kingdom's economic output.

The projected price for Ant Group's Shanghai stock is 68.8 yuan, while its Hong Kong stock is expected to launch at 80 Hong Kong dollars. Shares were expected to go live on their respective exchanges on 5 November but the listing has since been cancelled.

In the days leading up to its release, institutional investors vying for a slice of Ant Group were bidding as high as 120 Hong Kong dollars, or $15.50, per share in gray-market trading. This constitutes a 50% premium on the listing price and served as an indication of how high the demand was for Ant Group shares.

China suspends Ant Group's listing

On 2 November, Jack Ma, Ant Group's billionaire co-founder, was asked to attend a meeting with the China Securities Regulatory Commission and the State Administration of Foreign Exchange.

The next day, the Shanghai Stock Exchange announced it was suspending Ant Group's listing – a crippling blow just days ahead of its 5 November release. Following its Shanghai suspension, Ant Group elected to hold off on its Hong Kong release until it could resolve regulatory issues.

While it's still not entirely clear why Ant Group's Shanghai listing was suspended, some analysts suggest the regulatory move was a response to Ma's push for Ant Group to be treated as a tech company instead of a financial institution. To amend its listing, Ant Group needs to resolve its regulatory issues and meet listing conditions for information disclosure requirements.

Following the IPO's suspension, Alibaba, which holds 33% of Ant Group, saw its Hong Kong and NYSE shares drop by 7% and 8% respectively.

Ant Group has apologised to investors and pledges to refund the money it has collected. We'll update this page as more information becomes available.

How to invest in Ant Group from Australia

It's anyone's guess if or when IPO stock will be available again after negotiations are finalised.

But even if Ant Group applies to list once more, it's very hard to invest in Chinese/Hong Kong IPOs from Australia. As far as we know, there are no local online brokers that offer international IPOs.

If you hold Hong Kong residency you may have the option of opening an account with a Hong Kong-based broker, so long as you have a local bank account. For instance, online brokers Phillip Capital, Futu and Bright Smart Securities hold offices in Hong Kong and they offer some IPOs.

Your other option is to buy stocks once it lists on the stock exchange. To do this you'll need to open an international brokerage account with access to Hong Kong or Shanghai exchanges, such as CMC Markets, Saxo Capital Markets or Interactive Brokers (check out our comparison table for more details).

Buy Alibaba shares

Another option for those wanting to invest in Ant Group is to back its parent company Alibaba which trades on the New York Stock Exchange (NYSE).

While this is a less direct investment than purchasing Ant Group stocks outright, it is more common for online brokers to offer US stocks than Chinese, and brokerage tends to be cheaper. Check out a list of brokers that offer Alibaba shares here.

Buy exchange traded funds

You can also indirectly add Ant Group stocks to your portfolio by investing in exchange-traded funds (ETFs) that track the stock. Once the stock hits the market, keep an eye out for ETFs that add Ant shares to their overall holdings. By purchasing these ETFs, you'll gain some exposure to Ant Group's stock.

The following Australian-listed ETFs track Chinese stocks, so they may be worth watching once Ant Group shares go live:

To invest in Australian ETFs like the ones above you'll need to open an account with access to the Australian Securities Exchange.

Ant Financial's balance sheet

Ant Group is a subsidiary of Alibaba Group and was formed in 2014 to manage Alipay, a digital payments platform with over 711 million active users.

For the 6 months ended in June 2020, Ant reported revenue of 72.5 billion yuan, or US$10.5 billion. Profits over the same time period were 21.9 billion yuan, or US$3.2 billion. These figures put Ant Group's revenue up 38% from the same period in 2019, a promising trend for interested investors.

Ant reports that its payment app, Alipay, processed 118 trillion yuan, US$17 trillion, in transactions for the 12 months ended in June 2020.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs comes with a higher risk of losing money rapidly due to leverage. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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