The biggest public offering of all time has given rise to an investor frenzy for record books.
Jack Ma’s Ant Group company attracted orders of at least $ 3 trillion from individual investors for its dual listings in Hong Kong and Shanghai, 10 times more than enough money to buy JPMorgan Chase & Co. The bidding in Hong Kong was so intense that a brokerage platform briefly overwhelmed by orders. Retail demand in Shanghai exceeds 870 times the initial supply.
The stampede is airing predictions of a first-day pop when the ant is due to begin trading on November 5, even as suspicion risks including the US election, tightening regulations in China and Kovid worldwide -19 to increase infections.
Whether or not Ant grows, Chinese fintech Bemothoth’s IPO of more than $ 35 billion represents a major vote of confidence in a company that could shape the future of global finance. This is China Inc. Also underscores the ability to marshal large amounts of capital without exploiting US markets, a victory for Beijing as it seeks to reduce the threat of US financial sanctions.
Chen Wu, a 35-year-old software developer, was among those asked for a piece of the ant offering this week. His brokerage allowed a small number of customers to supercharge their bets using leverage 33 times, handing out allocations on a first-come, first-served basis.
“When it was released in the afternoon, I refreshed my page again, clicked and clicked,” Wu said Tuesday after ordering a block of HT $ 5.7 million ($ 735,322) Ant shares, his Equals over 80% of the current equity portfolio. . “I received it around 12:01 pm and the quota was over within minutes. I was lucky.”
Ant is no doubt profiting from unusually turmoil among retail investors globally, but it’s not just mom-and-pop driving demand. Temasek Holdings Pte, T. Rowe Price Group Inc. And big-name money managers including UBS Asset Management are also angles for allocation. According to ANT’s prospectus, institutions and strategic investors could take up about 96% of offerings in Shanghai and up to 97.5% in Hong Kong, although figures may change due to clawback and greenshow provisions.
Retail investors are still likely to have a significant impact once trading begins – particularly in Shanghai where individuals run the majority of daily business. About 5.16 million retail accounts held a record 19.05 trillion yuan ($ 2.85 trillion) of orders for ant shares on the city’s star market, where participants are required to hold a minimum of 500,000 yuan in their accounts.
In Hong Kong, the retail portion attracted over HK $ 1.3 trillion in orders as early as 11 am local time or 394 times for initial supply, the South China Morning Post cited people familiar with the matter.
Many investors in the city increased their bets by borrowing money, taking advantage of historically low interest rates. Broker Securities Futu Securities, which faced a brief outage brokerage due to a flood of orders on Tuesday, said its margin quota for Ant was used in about 20 minutes. According to the Hong Kong Economic Journal, banks and brokerages have provided a margin loan of at least HK $ 519 billion to retail punters.
“There has been unprecedented investor interest,” said Jasper Chan, assistant manager of corporate finance at Phillip Securities, with all allocations of HT $ 20 billion that had previously become available, set aside for ant margin loans that day. Chan said the IPO demand is wider than usual due to the small minimum lot size of 50 shares, which is equivalent to about HK $ 4,040.
Yuki Chung, a 30-year-old University Teaching Assistant in Hong Kong, said he planned to bid for HK $ 500,000 of 90% of Ant shares, 90% of which would be borrowed. “The margin rates offered by banks can be less than 1%, which is certainly very attractive,” she said. “Everyone is participating in the IPO, so I think I should do that as well. I do not want to lose. “
Others are wary of placing too much trust in a rally. Elle Lam, a 28-year-old media professional who has invested in several Hong Kong IPOs this year, used the remaining 50% of his available cash to bid for the upcoming issuance of the Hong Kong government, with just 50 of Ant. It is planned to order share lots. Inflationary bond
“People are definitely a lot more hypnotized,” Lam said. “I think the ant’s valuation is very expensive, so the profit may be limited on the day of its debut.”
According to Bloomberg Intelligence, the IPO price is about 36 times 20 times earnings, surpassing average valuations for both global payment companies and large Hong Kong-listed tech stocks.
Nevertheless, the rich valuation is not a hindrance to the Hong Kong IPO of late. Bottled water giant Nongfu Spring Company, which debuted in the city last month after acquiring 1,148 times the volume of shares initially set for retail investors, now rose nearly 55 times after rising 65% from its offer price. Estimated Income. .
“I think Ant can grow 30% -40% on the first day,” said Wu, the software developer who took a loan to buy the shares. “I’m not too worried about the performance.”
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