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Ant Group’s IPO Could Be the Largest in History

Bypassing Wall Street

Ant Group, the Chinese fin-tech company, is planning an IPO in Hong Kong and Shanghai. Ant’s payment service has 730 million monthly users, which is more than twice the population of the US. The platform functions much like a bank, giving users access to credit cards, mutual funds, insurance, and more. Ant’s profits have climbed more than 1000% between the first half of 2019 and the first half of 2020

If Ant hits its goal of raising $34.4 billion, its IPO would be the largest in history. Ant would beat its former parent company Alibaba (BABA), which raised $25 billion in 2014, as well as Saudi Aramco (ARAMCO:AB), the state-controlled Saudi Arabian oil company, which raised $29 billion and currently holds the record for the largest IPO to date.

A Win for Chinese Stock Exchanges

Ant’s public debut will also be historic because it will bypass New York stock exchanges. Several years ago, a company like Ant likely would have rushed to list on Wall Street the way Alibaba did. But instead, Ant will only list in Hong Kong and on Shanghai’s Star Market—a new technology-focused exchange.

Ant’s listing will be a big win for the Chinese government. Beijing has been working to encourage more Chinese tech companies to list their shares at home and to spur more investors to buy stocks on Chinese exchanges.

The Chinese government has also been working to demonstrate that Hong Kong can remain an international financial hub despite new national security laws. Additionally, Chinese President Xi Jinping has been working to grow the Star Market recently, and Ant’s choice to list on the new index will give the Star Market more value and legitimacy.

Heightened Scrutiny For Chinese Companies in the US

Ant’s decision not to list on Wall Street was likely influenced by recent tensions between the US government and Chinese tech companies like TikTok and WeChat. Additionally, Chinese coffee chain Luckin Coffee (LKNCY) was kicked out of the Nasdaq over the summer because of accounting irregularities, and Ant is likely trying to avoid heightened scrutiny of Chinese companies on US exchanges.

Ant’s Hong Kong stock will begin trading on November 5, and has not yet provided a Shanghai listing date. Investors and lawmakers around the world will be eager to see how this historic IPO unfolds and how it could impact markets as well as the geopolitical landscape.

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