China's Ant Group Passes Final Hong Kong Stock Exchange Hurdle... Positive Signal for World's Largest IPO

Shanghai Stock Exchange Attempts Approval This Week
Expected to Raise $35 Billion in World's Largest IPO Fundraising

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Ant Group, the fintech-focused financial subsidiary of China's Alibaba, has passed the public hearing, the final hurdle for listing on the Hong Kong Stock Exchange, signaling a green light for the world's largest initial public offering (IPO).

The China Securities Regulatory Commission (CSRC) announced on the 20th via its website that the Listing Committee of the Hong Kong Stock Exchange has approved Ant Group's listing on the Hong Kong market.

Approval for Ant Group's listing on the Shanghai Stock Exchange's Science and Technology Innovation Board (STAR Market) is also expected within this week, making simultaneous listings on both the Hong Kong and Shanghai stock exchanges possible. Ant Group had applied for simultaneous listings on the Shanghai STAR Market and the Hong Kong Stock Exchange on August 25.

Ant Group's IPO is attracting attention as it is likely to surpass Saudi Arabia's state-owned oil company Aramco, the largest IPO in history. Aramco raised $29.4 billion (33.5 trillion KRW) when it listed on the Tadawul stock exchange last December, but Ant Group's IPO is projected to reach $35 billion (approximately 39.9 trillion KRW).

However, there are pessimistic views that it is uncertain whether the expected amount of investment will be raised, as the U.S. government is reportedly considering sanctions against Chinese electronic payment platforms such as Ant Group (Alipay) and Tencent (WeChat Pay).

This is because the U.S. government may not allow American investment firms to participate in the IPO. It is reported that the U.S. is concerned that Chinese fintech companies like Ant Group could dominate global electronic payments. There are worries that the Chinese Communist Party could access personal and financial information of hundreds of millions of people.

However, there is growing analysis that it will be difficult to block further investments from U.S. companies, as American investment firms such as Silver Lake Management, Warburg Pincus, and Carlyle Group invested more than $500 million in Ant Group back in 2018. The fact that the IPO underwriters?Citigroup, JP Morgan Chase, and Morgan Stanley?are all American investment banks is also cited as a factor encouraging the creation of the 'largest IPO ever.'

Ant Group already has 768 million subscribers (as of March 2020, according to the China Zhongshang Industry Research Institute). Among them, the usage rate in daily life reaches 85%. Considering that users typically subscribe to both Alipay and WeChat Pay, it is estimated that WeChat Pay also has over 700 million users.

As of the end of last year, market share was 48.8% for Alipay, 33.1% for WeChat Pay, and 7.5% for UnionPay (Yinlian Card), in that order.

Electronic payment systems such as Alipay and WeChat Pay are used by most Chinese people, and one must have a bank account in China to use these electronic payment systems. Simply downloading the payment application (app) does not enable usage.

A local source said, "In China, life is so dependent on Alipay and WeChat Pay that it has become commonplace," adding, "While the U.S. can block the establishment of basic systems such as bank payment accounts and merchants worldwide, it will not be an obstacle to this listing."