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Finance

Ant Group clears last hurdle for IPO said to target $35bn

China securities watchdog's blessing paves way for launch as early as Tuesday

The Shanghai office of Alipay, the mobile and online payment platform owned by Ant Group.   © Reuters

HONG KONG -- Ant Group has secured the final regulatory approval to launch what is shaping up to be the world's largest initial public offering as early as next week.

The China Securities Regulatory Commission in a statement on its official Weibo social media account said it has approved the Shanghai leg of the IPO. The company, which is controlled by billionaire Jack Ma, already received the Hong Kong stock exchange's approval on Monday and can now open the dual listing for subscription. The IPO could raise about $35 billion, people familiar with the matter have said.

Ant filed an updated onshore prospectus later on Wednesday where it revealed it plans to list up to 1.67 billion shares each in Hong Kong and Shanghai, selling 11% of its equity. A 15% overallotment could be exercised by bankers, it said. The mainland leg of the IPO will be priced on Oct. 27.

The Hangzhou-based company, the world's most valuable fintech, also revealed that Alibaba Group Holding through its Tmall unit will subscribe to 730 million shares in Shanghai. Alibaba already owns a third of Ant. Strategic investors who have agreed to accept a 12-month lock-up will account for 80% of the domestic float.

In the updated prospectus, Ant said gross profit in the first nine months climbed 74.3% and operating revenue increased 42.6% on the year.

Earlier, Ant planned to pre-market the IPO from Thursday and open the books for subscription on Oct. 27. That would allow it to price on Oct. 30 with a listing a few days after the Nov. 3 elections in the U.S., said an informed source. Hong Kong IPOs typically take 10 days from open to listing.

The CSRC acceptance for the offering in Shanghai and Hong Kong came a little later than expected and has forced Ant to alter the schedule for the IPO, according to two people familiar with the matter. The company had initially expected to make its stock market debut this month but under revised plans it will list in early November or just a few days after the U.S. elections.

"On hindsight, we had factored in a very optimistic timeline," one of the people said after the CSRC approval on Wednesday. "We were keen to price and list before the U.S. elections to avoid any uncertainty for investors. Now we can set the final pricing before the polls but will most likely only list after that."

Ant received approval from Shanghai's Nasdaq-style STAR market last month and filed for registration of the IPO with the CSRC on Sept. 22. The CSRC has 20 working days to approve or reject the application, according to its IPO registration rules. Wednesday's approval came towards the end of the period.

While it awaited regulatory clearance, Ant has held discussions with large institutional investors, including Singapore's GIC and Temasek, about investing in the IPO.

In the mainland, five mutual funds raised $9 billion from more than 10 million retail investors, with 10% of the funds earmarked for the IPO, via Ant's Alipay platform.

Global investors have been pouring money into Hong Kong to ensure they get a slice of the offering. The city has seen almost 170 billion Hong Kong dollars ($21.3 billion) of inflows since Ant filed its IPO application on Aug. 25, forcing the Hong Kong Monetary Authority to intervene multiple times to keep the local currency inside its trading band with the U.S. dollar.

Local brokerages are beefing up their credit lines to offer margin finance to retail investors. Some brokers have offered to lend stock buyers 20 times the cash they put up, in anticipation of bumper returns for the shares on their listing.

Ant, which began as a payment unit of Alibaba, is now a virtual finance mall. It is China's biggest provider of online consumer loans and its platform generates billions of yuan in sales from investment and insurance products.

If completed, the $35 billion IPO would smash Saudi Aramco's $29.4 billion offering last year as the largest ever.

Alex Fang in New York contributed to this report.

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