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Finance

Ant Group to close IPO to institutions early due to heavy orders

Subscriptions 'pouring in' from investors eager for piece of $34.5bn offering

Ant Group made a name for itself with its Alipay mobile wallet before branching out into a wide range of financial services.     © Reuters

HONG KONG -- Ant Group plans to cease taking investor orders for the Hong Kong portion of the world's largest initial public offering on Wednesday, a day earlier than planned, after subscriptions exceeded the allotted shares within an hour, according to three people familiar with the deal.

The institutional order book, which represents 97.5% of the 1.67 billion shares on offer in Hong Kong, already has been multiple times overfilled, with subscriptions coming in from some of the world's largest fund managers, sovereign wealth funds and state investment funds. Several have put in bids for more than $1 billion of shares each, the people said.

"It was like the flood gates just opened," said one of the persons with knowledge of the situation. "Investors' appetite has been overwhelming. Orders keep pouring in."

Ant plans to close its institutional book-building on Wednesday at 5 p.m. local time in each of the world's regions, instead of at that time on Thursday.

The Hong Kong retail portion of the IPO, which opened for subscriptions at 9 a.m. on Tuesday, will remain open, according to one of the familiar persons. The order period is scheduled to close at noon on Friday, according to the offering prospectus.

A representative for Ant, an affiliate of Chinese technology conglomerate Alibaba Group Holding, declined to comment.

The Hangzhou, China-based fintech company, which will join the ranks of the world's most valuable financial services companies after the IPO, is aiming to raise $34.5 billion, split between the Hong Kong and Shanghai stock markets.

The mainland portion of the offering saw institutional investors put in bids for 284 times the shares on offer during initial price consultations, the company said.

Strategic investors who have agreed to accept a 12-month lockup period will account for 80% of the Shanghai listing. Alibaba online retail platform Tmall will subscribe to 730 million shares, according to the prospectus for the mainland listing, to keep Alibaba's ownership in Ant at one-third.

Money from global investors has been flowing into Hong Kong to chase the offering. The city has seen over 200 billion Hong Kong dollars ($25.8 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.

A retail investor frenzy, too, has been building up in Hong Kong, with brokers putting together record margin financing facilities.

Bright Smart Securities & Commodities Group will provide as much as HK$50 billion in financing, it highest-ever allocation, while Futu Holdings, an online broker backed by Tencent Holdings, is providing up to HK$30 billion. HSBC Holdings is ready with HK$100 billion in margin loans to support Ant orders.

Should Hong Kong retail bids reach at least 20 times the shares on offer, the allocation to such investors will rise to 10% of the Hong Kong offering, with allotments to institutional investors cut proportionately, according to the prospectus.

Ant is offering a combined 11% stake by issuing 1.67 billion shares in both Hong Kong and Shanghai. The IPO plan will value the company at about $313 billion, just ahead of JPMorgan Chase and well over Bank of America's current market capitalization.

The company may raise another $5.2 billion if a 15% overallotment option is exercised by underwriters, it said.

Ant is expected to make its debut on the two exchanges on Nov. 5.

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