Ant Group IPO raises record £2.32 trillion in retail demand

The Shanghai leg of the IPO drew about £2.16 trillion ($2.8 trillion) of bids from retail investors, a company filing to the stock exchange showed

Retail investors placed bids for a record £2.32 trillion ($3 trillion) of shares in Ant Group Co Ltd’s dual listing in an unprecedented show of interest by betting on demand for its financial services in China.

The total value of the bids is equivalent to Britain’s gross domestic product, and underscores how Ant is capitalizing on the popularity of its Alipay payments app, to stage the world’s biggest initial public offering despite market uncertainty ahead of U.S. elections.

Ant, backed by e-commerce behemoth Alibaba Group Holding Ltd, is set to raise about £26.57 billion ($34.4 billion) with the dual listing split fairly evenly between Shanghai’s STAR Market and Hong Kong.

Retail investors in the two markets used their savings and borrowed heavily from banks and brokerages for what many saw as once-in-a-lifetime investment opportunity, financial industry sources say.

The Shanghai leg of the IPO drew about 19 trillion yuan ($2.8 trillion) of bids from retail investors, or 872 times the number of shares earmarked for them, a company filing to the stock exchange showed on Thursday.

Some banks in Hong Kong offered as much as 20 times leverage at interest rates of between 0.4% and 0.5% for a period of around 10 days, banking industry sources said.

Retail investors’ enthusiasm for Ant’s flotation has triggered a “claw-back mechanism”, where their heavy over-subscription could result in them receiving a greater share, Ant said in the Shanghai filing.

Its stock market debut had been clouded by concerns over growing regulatory scrutiny at home for its lucrative consumer credit business, as well as a U.S. State Department proposal to add the company to a trade blacklist.

Yet investors have largely shrugged off those concerns, as they bet on the continued growth of Alipay and Ant’s wealth management and insurance products.

The shares are expected to start trading in Hong Kong and Shanghai on Nov. 5, a couple of days after the U.S. election, which could fuel a spike in market volatility.

The bookbuilding for the Hong Kong leg of the IPO ran from Monday to Friday, while books for the Shanghai leg were open for one day on Thursday.