Big Tech eases Ant’s march into public markets

A who’s who of backers stands to clean up, on paper at least, from Ant’s initial public offering in Shanghai and Hong Kong

  
An employee stands next to the logo of Ant Financial Services Group, Alibaba's financial affiliate, at its headquarters in Hangzhou, Zhejiang province, China January 24, 2018.

An employee stands next to the logo of Ant Financial Services Group, Alibaba's financial affiliate, at its headquarters in Hangzhou, Zhejiang province, China January 24, 2018.

Reuters/Shu Zhang

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

HONG KONG  - When China’s National Social Security Fund made its first direct investment in 2015, the vice chairman described it as an elephant falling in love with an ant. Some insect. Jack Ma’s financial technology firm, Ant, was already worth nearly $50 billion. It is now preparing to go public at a valuation that could reach $250 billion or more. Not long ago, that would have raised questions about whether the investing ant masses would be fools to become enamored of an elephant.

A who’s who of backers stands to clean up, on paper at least, from Ant’s initial public offering in Shanghai and Hong Kong. State-connected outfits such as China Investment Corp and China Development Bank got in early. A Series B round raised $4.5 billion in 2016.

Ma spread the wealth in a 2018 round, where despite being valued at $150 billion, Ant attracted international investment glitterati: venture capitalists Sequoia China and GGV, buyout shops Carlyle and Silver Lake, portfolio managers from BlackRock to T. Rowe Price, and Singaporean and Abu Dhabi sovereign funds. Hong Kong billionaire Li Ka-shing got in on the action, as did Thailand’s richest man, Dhanin Chearavanont. Credit Suisse also took a stake.

Given the enthusiasm of Asian mom-and-pop investors and cheap money fuelling tech stocks, it isn’t hard to imagine recent Ant backers doubling up before long. To capture the sorts of returns on tap for those who got in earlier, however, will require Ant to surpass a $1 trillion market cap.

Similar concerns arose about the hoi polloi getting fleeced when Facebook went public in 2012 at what seemed like a hefty $100 billion valuation. Eight years later, it’s worth eight times more. Likewise, it took Microsoft about eight years to soar from an already eye-popping $200 billion market cap to the once-unthinkable 13-digit mark. Apple blazed from $1 trillion to $2 trillion in only about two years.

For Ant, achieving that kind of success will depend on rapid growth, chunky profit margins and continuing market exuberance that rewards it with a healthy multiple on expected earnings. Those are big ifs, but Big Tech has cleared the way for a big Ant to march into public markets.

CONTEXT NEWS

- China's fintech giant Ant has filed to go public in a dual Hong Kong-Shanghai listing, according to the company's draft prospectus dated Aug. 25. A float could launch as soon as October.

- Ant, which owns online payments service Alipay, could raise as much as $30 billion at a valuation of more than $200 billion, Reuters reported, citing sources.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Pete Sweeney and Jamie Lo) ((jennifer.hughes@thomsonreuters.com; Reuters Messaging: jennifer.hughes.thomsonreuters.com@reuters.net))

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