Ant Group listing would lift Hong Kong’s flagging IPO market

FILE PHOTO: The Hong Kong Exchanges flag, Chinese national flag and Hong Kong flag are hoisted outside the Hong Kong Stocks Exchange in Hong Kong June 7, 2016. REUTERS/Bobby Yip/File Photo

An initial public offering from Alibaba’s Ant Group by year-end would give equity capital markets in Hong Kong a timely boost after a new security law cast in doubt the city’s future as a global financial centre, analysts said on Thursday.

With new deals worth $4.17 billion in the first half, Hong Kong’s exchange accounted for 7.6% of the global IPO market, though down from a share of 11%, and deals worth $7.91 billion, in the same period last year, Refinitiv data showed.

The fall in value ranked Hong Kong as the fourth most active exchange after the Nasdaq, mainland China’s new Star Market and the Shanghai stock market.

A listing by Ant Group, the fintech arm of the Chinese e-commerce giant, would add diversity and reinforce Hong Kong’s reputation as a global financial centre, said Hao Hong, head of research at Bocom International.

“Hong Kong investors don’t have that much opportunity to invest in these Chinese tech companies,” Hong told Reuters.

“Seventy percent of the Hong Kong market is finance and property. That isn’t to say they are not good companies, but it isn’t that representative of where the economy is going in the future.”

Aequitas Research analyst Ke Yan, who publishes on the SmartKarma platform, said an Ant listing would “make Hong Kong equity market the top choice for access to leading Chinese tech and media companies.”

The comments followed a Reuters report on Wednesday that cited two sources with direct knowledge as saying that Ant planned a Hong Kong float as soon as this year, and targeted a valuation of more than $200 billion.

The company denied the report.

The sources said Ant was considering listing 5% to 10% of its stock, in what would be the world’s largest IPO this year, based on the estimated valuation.

Ant’s listing would also bring a lucrative payday for investment banks in Hong Kong.

Alibaba’s $12.9-billion secondary listing in Hong Kong last year generated almost $32 million in fees for banks, the company’s U.S. filings showed.

Equity capital markets deals make up almost 40% of the regional investment banking wallet, versus 25% globally, a Reuters calculation from Refinitiv data shows.

Mandates to lead Ant’s deal will be coveted, not just for the fees generated, but also for the prestige that accompanies a high-profile transaction.

Alibaba is known to be close to Credit Suisse and CICC which sponsored the secondary listing last year.

Morgan Stanley was ranked number one in the Asia Pacific ECM league tables in the first half, Refinitiv shows, ahead of Goldman Sachs and JPMorgan.

Hong Kong’s new security law took effect last week.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.