Ant Group is raising $34.5 billion in the world's biggest IPO at $315 billion valuation

Update: China has suspended the IPO of Ant Group, citing "major issues" as the reason for the suspension.

Ant Group is raising $34.5 billion through initial public offering (IPO) in Shanghai and Hong Kong at $313 billion valuation, making it the world's biggest IPO.

Ant Group, an affiliate of the behemoth tech holding company Alibaba Group, is making a dual-listing on Shanghai and Hong Kong bourses. It plans to issue 1.67 billion shares on each stock exchange at $10.26 and $10.32 per share. Hence, it would raise $17.23 billion from Shanghai and $17.24 billion from Hong Kong.

Expected to raise a total of $34.5 billion, Ant unseats Saudi Aramco — the Saudi Arabian oil company — which raised $29 billion through its IPO last year as the world's biggest IPO of all time.

And with $315 billion valuation, Ant is larger than some of the biggest American banks, including Goldman Sachs, Wells Fargo, and JPMorgan Chase. Its valuation is also bigger than the gross domestic product of Finland and Egypt.

Between Monday and Wednesday, the Hong Kong listing has already been oversubscribed. And Ant Group is planning to stop taking investor orders, a day earlier than scheduled.

Demand has been so great that the Chinese fintech behemoth is set to close the institutional investor order book today,  Bloomberg reported. The fintech company was initially planning to close the Hong Kong book on Thursday, 5 PM. But this potential move would bring the closing in line with the Shanghai listing.

Jack Ma, the co-founder and former executive chairman of Alibaba Group, spun out Alipay as a separate company from the e-commerce company in 2011. This was eight years after Alipay was launched. In October 2014, Alipay was rebranded as Ant Group Services. And ahead of its IPO, the name was changed again to Ant Group in July 2020.

Today, Ant Group houses six brands, namely:

• Alipay — China’s largest mobile payments service;
• Yu'e Bao — an online spare cash management platform;
• Huabei — a consumer credit platform that supports consumers to "buy now and pay later";
• Xiang Hu Bao — which means "mutual protection" is an online mutual aid platform within the Alipay app;
• MYbank — an online bank with no physical branches; and
• Zhima Credit — a private and independent credit assessment service built for commercial use.

It is important to note that the parent company, Alibaba Group, owns a 33% of Ant. And Jack Ma is the controlling shareholder of Ant, although he is not part its management. Eric Jing and Simon Hu are Ant's executive chairman and CEO, respectively.

Ant's IPO will make Jack Ma the 11th richest person in the world with a net worth of $71.6 billion, according to Bloomberg.

According to its regulatory filing, Ant Group is expected to start trading in Hong Kong with the ticker 6688 on November 5. But when the Shanghai  (688688) shares will begin to trade has not be announced. The use of number is in line with Ma's attachment to number eight, which symbolises wealth in China. Alibaba Group trades under the ticker 9988 in Hong Kong.

The founder of Janchor Partners, John Ho, who invested $400 million in Ant in 2018, said being able to invest in Ant is priceless. John described Ant's IPO as "a homecoming for capital markets in Shanghai and Hong Kong. John told Bloomberg that he's still trying to get more of Ant shares in Hong Kong.

What does Ant's IPO mean for African and Nigerian fintech startups?

Ant's IPO makes it the biggest fintech company in the world despite serving just one market: China.

And instead of a dual-listing on the New York Stock Exchange and the Stock Exchange of Hong Kong like its parent company Alibaba Group Holding did in 2014, Ant Group is dual-listing on two Chinese bourses: Shanghai and Hong Kong.

As of October 2, 2020, 217 Chinese companies are listed on the three largest American bourses, namely: NASDAQ, New York Stock Exchange, and the NYSE American. They have a total market capitalisation of $2.2 trillion, and Alibaba has the lion share.

The tension between the United States and China has been baulking the expansion plan of Ant Group. For instance: In 2018, US officials shot down Ant's plan to buy MoneyGram — the American money transfer company — for $1.2 billion. The deal was cancelled because both companies couldn't get a nod from the Washington panel that reviews foreign purchases.

This explains why many Chinese companies want to list on American exchanges as that could help them sway Washington. It also serves as a way of gaining foothold in America.

Ever since, Ant rarely talks about expanding in the US. Although it still plans to be serving a worldwide customer base of two billion people within a decade. Alipay says it has more than 730 million monthly users.

Cue in Africa. With a fragmented payment system ripe for innovation and upwardly mobile population, Africa can fulfil Ant's craving for expansion.

And following the acquisition of Paystack by Stripe, African fintech startups are well-positioned for merger and acquisitions. Just as Opera acquired Paycom Nigeria Limited to build out OPay into a super app, Ant can acquire Interswitch, Flutterwave, or any other African fintech.

Earlier this year, Ant acquired minority stake in Klarna — Europe's most valuable fintech company. It also owns 30.33% stake in One97 Communications Limited, which operates Paytm — Indian e-commerce payment system. Two years ago, Ant had also stealthy acquired EyeVerify — an American biometric security technology company.

Through his foundation, Jack Ma Foundation (JMF), Ma has been investing and supporting African entrepreneurs. Last year, JMF launched the Africa Netpreneur Prize Initiative to support and inspire the next generation of African entrepreneurs who are building a more sustainable and inclusive economy for the future.