Jack Ma’s Ant IPO lures $3 trillion of bids in retail frenzy

The greatest preliminary public providing of all time has unleashed an investor frenzy for the report books.

Jack Ma’s Ant Group Co. attracted no less than $three trillion of orders from particular person buyers for its twin itemizing in Hong Kong and Shanghai, sufficient cash to purchase JPMorgan Chase & Co. 10 instances over. Bidding was so intense in Hong Kong that one brokerage’s platform briefly shut down after turning into overwhelmed by orders. Demand for the retail portion in Shanghai exceeded preliminary provide by greater than 870 instances.

The stampede is fueling predictions of a first-day pop when Ant is because of begin buying and selling on Nov. 5, at the same time as skeptics warn of dangers together with the US election, tightening laws in China and rising Covid-19 infections worldwide.

Whether Ant surges or not, the Chinese fintech behemoth’s $35 billion-plus IPO represents a significant vote of confidence in an organization that might find yourself shaping the way forward for international finance. It additionally underscores China Inc.’s potential to marshal big quantities of capital with out tapping American markets, a win for Beijing because it tries to scale back its vulnerability to the specter of US monetary sanctions.

Chen Wu, a 35-year-old software program developer, was amongst these scrambling for a chunk of Ant’s providing this week. His brokerage allowed a small variety of shoppers to supercharge their bets utilizing 33 instances leverage, handing out allocations on a first-come, first-served foundation.

“When it was released at noon, I refreshed my page again and again, clicked and clicked,” Wu mentioned on Tuesday after ordering a HK$5.7 million ($735,322) block of Ant shares, equal to greater than 80% of his present fairness portfolio. “I got it around 12:01 p.m. and the quota ran out within minutes. I was lucky.”

Ant is little doubt benefiting from the unusually buoyant temper amongst retail buyers globally, however it’s not simply the mom-and-pop crowd driving demand. Big-name cash managers together with Temasek Holdings Pte, T. Rowe Price Group Inc. and UBS Asset Management are additionally angling for allocations. Institutions and strategic buyers might take up about 96% of the providing in Shanghai and 97.5% in Hong Kong, in keeping with Ant’s prospectus, although the figures might change as a consequence of clawback and greenshoe provisions.

Retail buyers are nonetheless more likely to have a major influence as soon as buying and selling begins — significantly in Shanghai the place people drive the overwhelming majority of every day turnover. About 5.16 million retail accounts positioned a report 19.05 trillion yuan ($2.85 trillion) of orders for Ant shares on the town’s Star market, the place members are required to have a minimal 500,000 yuan of their accounts.

In Hong Kong, the retail portion attracted greater than HK$1.three trillion of orders as of 11 a.m. native time on Friday, or 394 instances the preliminary provide, the South China Morning Post reported, citing individuals conversant in the matter.

Many buyers within the metropolis took benefit of traditionally low rates of interest to amplify their bets with borrowed cash. Futu Securities, the brokerage that suffered a short outage as a consequence of a flood of orders on Tuesday, mentioned its margin quota for Ant was used up in about 20 minutes. Banks and brokerages have supplied no less than HK$519 billion of margin loans to retail punters, in keeping with the Hong Kong Economic Journal.

“There has been unprecedented investor interest,” mentioned Jasper Chan, assistant supervisor of company finance at Phillip Securities, which allotted the entire HK$20 billion it put aside for Ant margin loans on the primary day they turned accessible. Chan mentioned demand for the IPO has been extra broad-based than common due to the small minimal lot dimension of 50 shares, which equates to about HK$4,040.

Yuki Chung, a 30-year-old college educating assistant in Hong Kong, mentioned she deliberate to bid for HK$500,000 of Ant shares, 90% of which might be funded with borrowed cash. “Margin rates offered by banks can be less than 1%, which is definitely very attractive,” she mentioned. “Everyone is taking part in the IPO, so I feel like I should too. I don’t want to lose out.”

Others are cautious of putting an excessive amount of religion in a rally. Elle Lam, a 28-year-old media skilled who has invested in a number of Hong Kong IPOs this 12 months, deliberate to order only one 50-share lot of Ant, utilizing the remainder of her accessible money to bid on the Hong Kong authorities’s upcoming issuance of inflation-linked bonds.

“People are certainly too hyped up,” Lam mentioned. “I think Ant’s valuation is too expensive, so the gain on the debut day could be limited.”

The IPO worth interprets right into a a number of of about 36 instances estimated 2021 earnings, surpassing common valuations for each international funds corporations and enormous Hong Kong-listed tech shares, in keeping with Bloomberg Intelligence.

Still, wealthy valuations haven’t been a deterrent for Hong Kong IPOs of late. Bottled water large Nongfu Spring Co., which debuted within the metropolis final month after receiving orders for 1,148 instances the quantity of shares it initially put aside for retail buyers, is now valued at about 55 instances estimated earnings after hovering 65% from its providing worth.

“I think Ant can rise 30%-40% in the first day,” mentioned Wu, the software program developer who took on debt to purchase shares. “I’m not too worried about the performance.”