China's Ant Group is adding to its list of financial advisers in preparation for launching its jumbo initial public offering in Hong Kong and Shanghai, according to people familiar with the matter.
The public markets debut of the world's largest unicorn is a major fee event for bankers, given the offering is likely to be the largest on record. A role on the deal also shows the bankers are in a pole position to make a market in its shares and capture future business from Ant as it continues to grow and consume capital.
British headquartered Barclays has joined the exclusive club of bookrunners on the Hong Kong leg of Ant's listing, alongside Chinese state-owned lenders Bank of China International and ICBC International, the people familiar said.
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The sponsors of Ant's Hong Kong share sale are China International Capital Corporation (CICC), Citigroup, JPMorgan and Morgan Stanley, according to the prospectus that Ant lodged with the Hong Kong stock exchange. CICC and China Securities are joint sponsors and underwriters of the Shanghai leg of the IPO.
Meanwhile, Goldman Sachs and Credit Suisse are among the global coordinators on the bumper share sale, the Post has previously reported according to people familiar. Credit Suisse is also a shareholder in Ant according to its prospectus. More banks may be added to the syndicate of advisers as the IPO preparations progress, the people said.
Spokespeople for the banks and Ant either declined to comment or did not immediately respond to requests for comment on the line up.
The banks are working together to sell the shares, but the different titles denote differing responsibilities, type of work and the fees they can command. Sponsors shoulder the greatest responsibility in shepherding an IPO through to its public market debut and typically reap the greatest share of fees, while bookrunners keep tabs on investors buying into the share sale.
Increased competition from new entrants has squeezed bankers' fees down to around 2 per cent on Hong Kong listings, but fees are still fat in Shanghai's Nasdaq-style Star Market at an average of 7.3 per cent. Revenue percentages on larger deals are usually scaled back. For Wall Street banks, the attraction of working on Star listings is dimmed by rules that they would have to take 2 per cent to 5 per cent of the company's stock and cannot immediately sell it, tying up their capital.
Ant, the operator of China's largest mobile payment app by volume Alipay, applied for a dual listing in Hong Kong and Shanghai's Star Market last month. After receiving the green light from Shanghai's Star Market, the paperwork for the mainland leg of the share sale has passed to the China Securities Regulatory Commission (CSRC) for registration.
Hong Kong's stock exchange typically waits for the CSRC to approve a listing application by a mainland China headquartered company before putting an IPO request to its listing committee for review, according to people with knowledge of how the procedure works at the exchange.
As and when Ant passes these final stages in the regulatory review process, it will ramp up the marketing of its shares to global investors.
Ant's IPO is set to smash the record held by Saudi Aramco's US$29.4 billion IPO last December as the biggest ever share offering. While Ant and its advisers are still at the early stages of gauging investors' appetite for its shares, the impending IPO could peg the Alipay operator's worth roughly between US$230 billion to US$250 billion, according to several estimates by analysts. Ant will list at least 10 per cent of its shares.
Ant's investment banking advisers will soon be sending out research from their analysts to institutional investors, which they hope will hone analysis of Ant's worth. The final yardstick will have implications for the market capitalisation of Ant's major shareholder, Alibaba Group Holding, the owner of the South China Morning Post.
"The market is also assigning very little value to our stake in Ant Group. Well, since many of you want to invest in Ant, and you're looking for allocations, you know the valuation and the market will soon tell the valuation," said Maggie Wu, Alibaba Group's chief financial officer during a presentation to investors day last month.
As the US election looms on November 3, anti-China rhetoric has surged. US senator Marco Rubio called on the Trump administration to delay Ant's IPO and slammed Wall Street for working on the deal, Reuters reported. Rubio did not immediately return emailed requests for comment.
Wall Street bank Morgan Stanley is leading the field of advisers so far this year in Hong Kong, with a 16 per cent market share of equity capital markets business. Goldman Sachs and CICC are chasing it with an 8.6 per cent and 7.4 per cent share respectively, according to data from Bloomberg.
Bank of China and ICBC are ranked 14th and 15th, respectively. BOCI Asia said it was the only Chinese investment bank mandated to assist Saudi Aramco with its IPO. Barclays does not have an equity capital markets team in Hong Kong but does have an active franchise in New York and London.
Wall Street has enjoyed a bumper year so far, as markets are on a tear and companies have sought investment banking advice and funding to help them navigate the economic turmoil unleashed by the coronavirus pandemic.
Goldman Sachs for example, saw its global investment banking business generate record quarterly net revenues of US$2.66 billion in the three months to June, including record quarterly net revenues in both equity and debt underwriting.
More from South China Morning Post:
- How Ant Group plans to pull-off world's largest ever dual IPO in Hong Kong and Shanghai amid coronavirus pandemic
- China's piggy bank, the National Social Security Fund, set to be among Ant Group's top IPO investors
- Ant Group gets the green light for mega IPO in Shanghai's Star Market as China pulls out all stops to help tech champions raise funds
- Ant Group's blockbuster Shanghai share sale gathers momentum, as overseas investors clamour for China exposure