Alibaba’s Ant Financial is planning an initial public offering on Shanghai’s main board in what could be China’s highest IPO valuation since 2010, Bloomberg reported, citing sources familiar with the matter. An IPO at a USD 60 billion valuation would be the biggest on the mainland since Agricultural Bank of China listed in Shanghai in 2010.
Zhejiang Ant Small & Micro Financial Services, controlled by Jack Ma, has been profitable for three years, enabling it to meet the listing requirements, and may begin the process as soon as this year, the sources said, requesting not to be named because the matter is private. Ma prefers a dual listing with Hong Kong if it gets regulatory approval, the sources said. Ant Financial declined to comment in an e-mailed statement.
Alibaba’s own plans to list in Hong Kong in 2014 were derailed because the city wouldn’t waive a ban on multiple share-class structures and the e-commerce operator instead held a record IPO in New York. Alibaba is entitled to about one-third of Ant Financial’s stake with regulatory approval, according to a 2014 filing to the US Securities and Exchange Commission. Alibaba has perpetual rights to 37.5 percent of the finance arm’s pretax earnings until it acquires the stake, the filing said.
Ant Financial paid Alibaba CNY 502 million in the December quarter, compared with 411 million yuan a year earlier, according to an Alibaba filing. That implies Ant Financial had pretax profit of at least CNY 1.3 billion for the period. The company posted net income of CNY 333 million yuan in 2011, according to filings from the local branch of the State Administration for Industry & Commerce.
An alternative option would be for Alibaba to receive a one-time payment equivalent to 37.5 percent of the value of Ant Financial determined prior to its IPO, which would amount to at least USD 22.5 billion based on its current valuation.
