Chinese tech giant Alibaba Group’s financial services subsidiary, Ant Financial is quickly working conducting its Initial Public Offering (IPO). There are still a lot of details that need to be hammered out, but the company seems to be relatively confident that they will not have to deal with any setbacks from the United States government when they are ready to launch. A senior equity analyst at Morningstar Inc., an American financial services company, Chelsey Tam said that the planned IPO of Ant Financial should move ahead without any hitches or delays from Uncle Sam.
Tam explained in the report that most of the customers and revenues of Ant Financial come from outside of the United States. Thus, even if tensions between United States and China force the former to put any restrictions on the company’s IPO, it could merely switch to another stock exchange because the decision would not have much impact on its bottom line. It was confirmed by the analyst that revenues of Ant Financial via its overseas operations are less than 5% of their total income. Thus, the revenues they generate in the United States would automatically be lower than that as well.
Most importantly, these revenues are generated from American companies that have their own business operations located in China and merchants then receive payments from there. Hence, there is overall no impact on Ant Financial’s bottom line. The analyst also added that if the company does decide to branch out, there is very little chance that it will focus on the United States because there are a number of other economies on which it can capitalize. The IPO of Ant Financial can turn out to be the biggest listing of a public company in history. Reports about the move had first come to light in August and Bloomberg had confirmed that the company was preparing for the listing.
According to the report, Ant Financial plans to raise approximately $30 billion in funding at a valuation of $226 billion from its IPO. This would allow the company to surpass the $29.4 billion that was raised by Saudi Aramco, the state-owned oil company from Saudi Arabia, last year, and would establish it as an unprecedented giant. The news source also disclosed that the company would probably want to list several other exchanges as well. It reported that several companies had already been tapped by the Chinese financial services giant for leading its offerings at the Hong Kong Stock Exchange.
These include the China International Capital Corporation, Morgan Stanley, Citigroup, and JPMorgan. For now, it is unclear as to who will lead the company’s offering at the New York Stock Exchange (NYSE). Regardless of the excitement, there is a possibility that the U.S. government may not permit Ant Financial to list itself on the NYSE. Alibaba is one of the biggest companies in China and its golden goose is Ant Financial. By June 2019, the company already had around 1.2 billion users globally because of Alipay, its payment processor.