Ant Group Raises $9 Billion Ahead of Mega IPO

The funds onboard may invest as much as 10% of their assets in Ant Group, as the company faces some possible trouble from the U.S.
Anthony RussoOct 12,2020,16:44

Jack Ma’s Ant Group has raised 60 billion yuan ($8.96 billion) from five mutual funds sold on its payments and lifestyle platform Alipay for its potential record-breaking IPO.

The funds, managed by some of China’s biggest investment companies, were sold by individual investors after a slew of advertising and marketing events, according to a report by The Wall Street Journal today.

However, investors had to agree to “lock up their money” for 18 months, according to the news outlet. Considering restrictions in place by Chinese regulators, each of the five funds informed investors that it may invest as much as 10% of its assets in Ant Group.

The news comes as Ant Group is pursuing a massive dual-listing on the Stock Exchange of Hong Kong and Shanghai's Nasdaq-like Star Market. The big listing would not only have a chance to shatter its parent Alibaba Group (NYSE: BABA; HKEX: 09988) $25 billion offering in 2014 but also exceed Saudi Aramco's record-breaking $29.4 billion IPO of January 2020. The fintech arm of Alibaba has already received the green-light from Shanghai but still awaits approval from Hong Kong.

Meanwhile, the company could have a problem on its hands. Ant Group, along with Chinese tech giant Tencent Holdings (HKEX: 07000; OTC: TCEHY), could potentially face restrictions in the United States due to national security concerns over their digital payment systems.

Senator Rubio Says U.S. Should Move to Delay Ant’s IPO

While less than 5% of Ant Revenues come from the U.S., Senator Marco Rubio said that the Trump administration should try to postpone Ant’s IPO.

“It’s outrageous that Wall Street is rewarding the Chinese Communist Party’s blatant crackdown on Hong Kong’s freedom and autonomy by orchestrating Ant Group’s IPO on the Hong Kong and Shanghai stock exchanges,” The U.S. republican Senator said in a statement to Reuters late last week.

He added, “The Administration should take a serious look at the options available to delay Ant Group’s IPO.”

In response, Trump could sign a new executive order banning the payment platforms, similar to his atttempts to ban TikTok and WeChat, both of which have found resistance in the U.S. courts.

It’s too premature to say if Washington will attempt to delay Ant’s IPO—but the development is worth monitoring.

Topics:Ant Group, Jack Ma, Tencent, Marco Rubio, Trump, WeChat, TikTok