Ant IPO will unlock vast riches for many early investors, employees

Photographer: Anthony Kwan/Bloomberg

It’s the hottest fintech in the world and it’s poised to go public in the coming months, unlocking vast riches for early investors and employees.

Ant Group, the online payment provider backed by Alibaba Group Holding Ltd. filed the prospectus for its initial public offering Tuesday, unveiling some of the people who stand to win big from the listing.

The obvious one is Jack Ma, whose stake in Ant will be worth $25 billion if it achieves the $225 billion valuation people familiar with the matter have said it’s targeting. That could catapult him to among the world’s 10 richest people.

Ant Chairman Eric Jing’s fortune will swell to $2.9 billion, and another 17 current and former Alibaba and Ant executives will join the ranks of billionaires, based on the ownership structure described in the prospectus.

An Ant representative declined to comment on the calculations.

Most of the billionaires, whose combined stake is valued at $57.9 billion, are part of the Alibaba Partnership, an elite 36-person group set up a decade ago to encourage collaboration within the e-commerce giant, override bureaucracy and, crucially, determine the annual cash bonuses for all members of management. It now comprises Alibaba and Ant management members, including Ma, Alibaba Chairman Daniel Zhang, and Lucy Peng Lei, a director at Ant.

The 19 winners own their stake through entities known as Hangzhou Junao Equity Investment Partnership and Hangzhou Junhan Equity Investment Partnership, two limited partnerships registered in Hangzhou that together hold about half of Ant.

Alibaba itself is the largest holder of the financial-services firm, with a 33% stake. The remaining portion belongs to 29 other shareholders, including those that have invested in Ant over the years. Ma is the ultimate controller of the group, according to the prospectus.

With a 30% holding in Ant, Junhan’s stake is valued at $67.2 billion, while Junao’s 21% ownership is worth $46.5 billion. Ma, Jing, Ant Chief Executive Officer Simon Hu and non-executive director Jiang Fang own shares in the two entities through a general partnership vehicle called Hangzhou Yunbo Investment Consultancy Co.

The limited partnership structure allows the general partner — in this case, Yunbo, which Ma controls — to exercise the entire voting power, regardless of the number of limited partners, according to Stephen Chan, a partner at Dechert LLP, an international law firm in Hong Kong that specializes in corporate finance.

Ma, however, has pledged to donate the economic interests of 611 million underlying Ant shares to charitable organizations and will lower his ownership to no more than 8.8%, as per the IPO prospectus and previous Alibaba filings.

Many tech startups lure employees with stock incentives that become lucrative when the company successfully completes an IPO. The Ant prospectus showed Junhan has granted share-based awards tied to Ant’s valuation to employees since March 2014, including to some new recruits and to reward performance of top performers.

“Share-based incentives are fairly common for tech companies,” Dechert’s Chan said. “Equity could be used instead of cash to incentivize and attract the necessary talent.”

Back in 2015, at least 12 Junao shareholders became billionaires, including former Alibaba Chief Executive Officer Jonathan Lu and former Chief Risk Officer Shao Xiaofeng, now the company’s secretary general. The entity’s ownership structure has since changed amid various Ant funding rounds.

While some questions remain around Ant’s ownership, one thing’s for sure: More Alibaba and Ant employees will become what could be characterized as “financially free.”

Bloomberg

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. 
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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.