Slim pickings: Ant to pay bankers up to $198 million in fees for Hong Kong IPO

In this news, we discuss the Slim pickings: Ant to pay bankers up to $198 million in fees for Hong Kong IPO.

HONG KONG (Reuters) – China’s Ant Group 688688.SS will pay bankers selling its shares in Hong Kong up to $ 198 million in subscription fees, according to its documents filed on Monday, in line with the trend of large issuers to share a small portion of their fundraising with advisors.

The fintech giant on Monday set terms for its dual listing in Hong Kong and Shanghai with the aim of raising up to $ 34.4 billion when it debuts in the world’s largest market.

It seeks to raise $ 17.24 billion in the Hong Kong tranche of the initial public offering (IPO), which would be the largest IPO in the Asian financial hub since the $ 20.5 billion offer from the insurance company AIA in 2010.

Documents filed with the Hong Kong Stock Exchange showed that the 24-person underwriting syndicate would earn 1% of the proceeds from Ant’s IPO.

In Hong Kong, it is common practice for banks to receive 2% to 2.5% of the proceeds of an IPO, according to Dealogic, which ranks the city as one of the lowest paying financial centers in the world. The fees paid to the banks managing the Shanghai portion of Ant’s listing were not immediately known.

China International Capital Corporation (CICC) 3908.HK, Citigroup CN, JPMorgan JPM.N and Morgan Stanley MS.N are the sponsors of the Hong Kong side of the deal, meaning they will be better paid for their leadership roles. on the agreement.

“It’s common for very large and high-profile transactions to pay lower fees. And it is as publicized as in Hong Kong, “Philippe Espinasse, Asian financial market consultant and former investment banker, told Reuters.

“The banks will have bent over backwards to participate in this IPO regardless of the lower subscription fees.”

MARKED OFFERS

In addition to being paid for their work as underwriters, investment banks are also seeking the ranking table credit that these branded deals bring by stepping up their marketing efforts for other important shows.

The commissions received by each of the banks were not listed in the updated prospectus, but it is industry practice for co-sponsors to be paid the most and the banks’ remaining commissions depend on the length of their role. in the operation.

The banks’ pay for Ant’s Hong Kong IPO, however, is slightly better than that of the company it is set to dethrone as the world’s largest IPO to date.

Saudi Aramco 2222.SE paid its 25-person banking union just $ 60 million after raising $ 29.4 billion, Reuters reported in January, with the top three banks earning half the fees.

The 2014 New York IPO of Ant’s parent company Alibaba BABA.N, which raised $ 25 billion, grossed banks $ 300 million, according to Dealogic data. For a FACTBOX on how Ant’s fees stack up against other major global offerings, see

Hong Kong’s record-breaking payday for banks was the Agricultural Bank of China’s 601288.SS IPO of $ 22.1 billion in July 2010, which brought in $ 412 million to its 10 banks. .

Reporting by Scott Murdoch in Hong Kong; Editing by Sumeet Chatterjee and Emelia Sithole-Matarise

Original © Thomson Reuters

Originally posted 2020-10-26 19:06:10.

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