Jack Ma’s Ant Group has been given the green light to go public after recent regulatory hearings in Shanghai to assess the company’s potential risk to the Chinese online finance sector. This result is a positive relief for Ma after China announced that it would draft new regulations to curb the unhealthy growth of financial holding companies such as Ant that were said to pose systemic risks to the nation’s $12.7 trillion economy.
With the ability to go public, Ma is aiming his sights on raising a minimum of $35 billion in Hong Kong and on China’s star market. If this goes ahead, the Chinese fintech will nab a record-breaking debut sale, beating Saudi Aramco’s current highest $29 billion sale. The amount Ma intends to raise was determined after assessing early investor interest which led to Ant lifting its IPO target based on an increased valuation of about $250 billion.
Prior to the assessment, Ant was valued at $225 billion, with Ma initially hoping to raise $30 billion. If successful, Ant will surpass Bank of America Corp.’s market value, be over twice the size of Citigroup Inc., and fall short only to the U.S.’s JPMorgan Chase & Co., which is valued at $300 billion.
Ant is Ma’s financial holding’s company worth $150 billion. Since its inception, Ant has experienced extraordinary growth, dominating the online financial services sector offering online payments, insurance, lending, credit scores, asset management. It also owns Alipay, which today is the most popular payment app in China, boosting consumer spending in the sector. Ant is affiliated with Ma’s other company, e-commerce giant Alibaba, which in 2014 debuted on Wall Street, then raising $25 billion in an IPO.
Despite the positive news, the Hangzhou-based company still faces regulations as the government proceeds with determining methods of curbing small-loan funding sources, capping lending rates, and determining ways to impose new capital license agreements on conglomerates. Undeterred, Ant will proceed with hearings with the Hong Kong Stock Exchange to navigate these challenges on the road to its first IPO. The tech giant’s decision to list its IPO in Hong Kong is a positive boost for the city, elevating its status as Asian’s financial hub.
