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Retail demand for Ant Group's IPO hits record £2.3 trillion

written by Bella Palmer

Ant Group operates China's biggest payments platform and other financial services

Retail investors placed bids for a record $3 trillion (£2.3 trillion) of shares in Ant Group Co Ltd's initial public offering (IPO), set to be the world's biggest, as savers bet on demand for its financial services in China.

Ant's dual listing is set to raise about $34.4 billion (£26.55 billion), split fairly evenly between Shanghai's STAR Market and Hong Kong, topping Saudi Aramco 's $29.4 billion (£22.70 billion) listing last December.

Investors, both retail and institutional, are rushing to buy into Ant, which operates China's biggest payments platform and other financial services, despite risks of greater scrutiny at home and abroad.

The Shanghai leg of the IPO drew about 19 trillion yuan (2.2 trillion pounds) 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.

The Hong Kong tranche got HK$1.3 trillion (128.7 billion pounds) in bids, or 389 times the shares on offer, said people with knowledge of the matter on Friday, declining to be identified as the information is not public yet.

The bookbuilding for the Hong Kong leg of the IPO of Ant, backed by e-commerce behemoth Alibaba, ran from Monday to Friday, while books for the Shanghai leg were open for one day on Thursday.

The $3 trillion (£2.32 trillion) of retail investor bids, equivalent to the gross domestic product of the United Kingdom, comes against the backdrop of shaky global markets ahead of next week's U.S. presidential election and a dour global economic outlook.

Investors in the IPO, however, have brushed aside company-specific and broader market concerns on hopes that Ant will continue to benefit from the rapid digitization of financial services in China.

Starting as a payments processor in 2004, Ant has built an empire in China by offering its users short-term loans that are credited within minutes, and selling insurance and investment products.

The unprecedented retail frenzy for Ant shares is backed by massive amount of margin lending by financial institutions, with brokerages in Hong Kong lending billions.

Hangzhou-based Ant decided to exercise a so-called greenshoe option to increase the share offer by 15% and is selling a total of 1.92 billion shares on the Nasdaq-style STAR Market, according to Ant's filing with the Shanghai exchange.

The company on Monday set the price of the Shanghai leg at 68.8 yuan (7.94 pound) per share. Before the greenshoe, it was offering 4% of the initial 1.67 billion shares to mainly retail investors across the country.

Retail investors' enthusiasm towards Ant's flotation has triggered a clawback mechanism, where their heavy over-subscription could result in them receiving a greater share, Ant said in the Shanghai filing.


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