Ant Financial – The World’s Most Anticipated IPO

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Now that the IPO has been priced, I’ll like to draw your attention to the allocation issue you will face. We have spoken to multiple banks on this and some have told us they can get guaranteed allocation and that was months back. The reason we did not proceed was simply that the lead manager told us they can’t even guarantee allocation. This is how the allocation will happen. 50% of the shares will be distributed to families, friends, and employees. The remaining 50% will have the majority going to the SWFs, big institutions, etc. Basically, the “big” boys. What’s left for the private banks will be a tiny fraction and then again, you’ll be subjected to the discretionary decisions of the PBs. You can choose the following to get your allocations :

 

  1. Argue your way through with your PB – tough one and time consuming
  2. Pray about it and hope for the best – not sure if divine intervention will work
  3. Buy on IPO day – you may chase the market
  4. Do an accumulator with 1 month guaranteed – we have spoken to some of the IBs and they have said they are willing to quote on day 1

Having said that, my take is valuations are high. If you get the shares from whichever avenue, and you are in the money, take profit when your target has been reached. You can find better levels for the longer term.

Company/Issuer Description

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

Source: Bloomberg

Terms of Issue

Issuer:

Ant Group Co., Ltd. (“Ant Group”, the “Company”)

Type of Offering:

H-share IPO on the Main Board of Hong Kong Stock Exchange

Stock Code:

Hong Kong H-share: 6688.HK

Number of Offer Shares:

1,670,706,000 H shares (Base)

1,921,311,900 H shares (Post-Shoe)

% of Enlarged TSO:

5.50% (Base)

6.22% (Post-Shoe)

Offering Structure:

International Offer tranche: 97.5%

Hong Kong Public Offer (“HKPO”) tranche: 2.5% (subject to clawback mechanism)

H-share Offering Price:

HKD80.00 per H-share

H-share Deal Size:

US$17.2bn (Base)

US$19.8bn (Post-Shoe)

Primary / Secondary:

100% Primary

Greenshoe:

Up to 15.0% of Base Offering (100% Primary)

HKPO Clawback Mechanism (HKPO tranche):

2.5% if HKPO subscription level < 10x

5.0% if 10x ≤ HKPO subscription level < 15x

7.5% if 15x ≤ HKPO subscription level < 20x

10.0% if 20x ≤ HKPO subscription level

Enlarged TSO:

c.30,376mm shares (Pre-Shoe)

c.30,878mm shares (Post-Shoe)

H-share Use of Proceeds:

–     Further pursue Company’s vision to digitalize the service industry, increase cooperation with partners and facilitate their digital transformation: 10%

–     Enhance innovation and research and development capabilities through enhancing Company’s world-class research team, investing in product and service innovation and leading technologies: 40%

–     Expand cross-border payment and merchant services initiatives through enhancing cross-border payments capabilities, investing in technology and service enhancement, and developing more digital services for consumers, merchants, and partners beyond China: 40%

–     Working capital and general corporate purposes: 10%

Internal Books Close:

Tuesday, 27 October 2020, 17:00

Expected Listing Date:

Thursday, 5 November 2020

H-share Lock-up:

–     Ant Group: 6 months

–     Hangzhou Junhan and Hangzhou Junao : 12 months (1)

–     Alibaba Group: 100% for the first year, 50% for the second year

–     Offshore Pre IPO Investors: 12 months

Please refer to the “Share Capital”, “Relationship with Controlling Shareholder” and “History and Development” sections for further details

Board Lot:

50 H-shares

Commission Charges:

1% (to be paid to Broker) + Client’s BOS Commissions + Market Charges

Distribution:

Reg S / 144A

Selling Restrictions:

Do take note of BOS cross-border marketing and refer to prospectus for other Selling Restrictions

 

Source: Bloomberg

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