Ant Group's initial public offering (IPO) has attracted a record 1.47 million retail investors spending an unprecedented amount of cash to bid for a piece of the world's biggest online payments company, according to people familiar with the matter.
The Hong Kong leg of the retail portion lured more than HK$1.3 trillion (US$167.7 billion) of funds as of 11am local time, or 394 times the initial number of shares on offer, they said. The ratio could increase further with the book closure at 12.30pm. The locked-up sum is equivalent to more than half of the HK$2.46 trillion of money in circulation every day in the local financial system, based on end-August M1 data published by the Hong Kong Monetary Authority.
The IPO will freeze more money than the stock sale by Chinese bottled water producer Nongfu Spring's HK$677.7 billion. The number of investors in Ant Group will also exceed the level when 970,000 people submitted bids for the shares of the Industrial and Commercial Bank of China (ICBC) in 2006, according to stock exchange data.
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"The offering is so hot that more than 1 million retail investors have sent their subscriptions," said Louis Tse Ming-kwong, managing director of Hong Kong-based brokerage Wealthy Securities. "It is a historic moment for Hong Kong's securities market."
Ant Group is selling 1.67 billion shares each in Hong Kong and Shanghai to raise about US$34.5 billion, making it the world's biggest IPO. Including a 15 per cent overallotment in each leg, the total size of the IPO will rise to US$39.67 billion. Strong demand from family-run investors in Hong Kong will trigger a mechanism where the retail allocation is raised to a maximum of 10 per cent from 2.5 per cent.
Investors are buying in the shares as the valuation is cheaper than overseas payment companies, said Hong Kong Securities Association chairman Gordon Tsui. Ant is the operator of Alipay and an affiliate of Alibaba Group Holding which owns this newspaper.
"Investors believe in the future economic and technological growth of mainland China," Tse added. "There is an increasing number of people using digital payment. Ant may have more room to go if it expands Alipay to overseas markets."
Ant Group began taking orders from retail investors in Hong Kong from Tuesday and ended at noon local time on Friday. HSBC, Bank of China (Hong Kong), other retail banks and the city's 600-odd brokerages have made available as much as HK$500 billion of loans as margin financing to help investors fund their subscription.
more to come …
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