Ant’s record strategic allocation in Shanghai IPO fuels small investor scramble

In this news, we discuss the Ant’s record strategic allocation in Shanghai IPO fuels small investor scramble.

SHANGHAI / HONG KONG (Reuters) – The decision by Chinese fintech giant Ant Group to dedicate a record 80% of the Shanghai leg of its double listing of $ 35 billion to strategic investors has led to a rush among small investors for what some see as a once-in-a-lifetime opportunity.

Ant [IPO-ANTG.HK], backed by e-commerce company Alibaba Group BABA.N, has launched a dual listing process in Hong Kong and Shanghai STAR Marketplace, and the offering is expected to be the largest in the world.

Some small Chinese investors, frightened by fears they could be left out of the initial public offering (IPO) at home, are looking to bid on the Hong Kong float’s Ant shares, which sources say will not include of fundamental slice.

The move underscores the likely strong demand for the float, even as the approaching US election has raised concerns about a spike in market volatility.

Shanghai-based Regan Fund Management Co is helping mainland investors subscribe to Ant’s Hong Kong IPO, said Shanghai-based company general manager Richard Li.

The chance of getting IPO shares in the Asian financial hub is 50 to 70 percent, much higher than on the mainland, Li told Reuters.

Non-strategic or smaller investors in China participate in a lottery-like bidding process for IPOs, which means that the fewer the number of new shares offered, the greater the chances of winning the draw. fate are weak.

“Everyone knows that buying stocks on the stock market makes good profits because most stocks are trading when they are just starting out,” said a banker working on the Ant’s STAR IPO, declining to be appointed because he was not authorized to speak about the process. “Demand has been pretty strong for Ant stocks.”

NETHERLANDS INVESTORS WOOING

Hong Kong-based brokerage houses are also taking advantage of the ant IPO frenzy to woo mainland investors.

Huatai Financial Holdings is offering new mainland clients Alibaba Hong Kong stock if they open a brokerage account and deposit more than HK $ 20,000, according to an announcement posted on an overseas investment platform in China.

Ant’s allocation of 80% of the offering to strategic investors, including a unit of Alibaba, is significantly higher than an average of 19% for those buyers in other STAR IPOs this year, according to the data from Refinitiv.

Prior to Ant, China’s largest mobile payments company, the strategic tranche record on STAR was set by chipmaker Semiconductor Manufacturing International Corp 0981.HK, which in July sold 43% of its secondary listing of 7, $ 6 billion to strategic investors, data shows.

On the Nasdaq-style STAR, most of the past IPO allocations have been skewed in favor of state investors, mutual fund houses, and certain hedge funds, excluding small institutions and individuals, most of whom are not even qualified to negotiate.

In another unprecedented move, some of Ant’s strategic investors are subject to longer-than-usual lock-in periods, the company’s filing with the Shanghai Stock Exchange showed.

Report by Samuel Shen in Shanghai and Julie Zhu in Hong Kong; Editing by Sumeet Chatterjee and Alex Richardson

Original © Thomson Reuters

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