It is a stunning expression of China’s economic vigour and Jack Ma’s business success. Ant Group has breezed past ramped-up expectations, pricing its shares at Rmb68.80 ($10.26) apiece. That values the payments arm of Alibaba, the ecommerce group he founded, at $313bn. JPMorgan is worth only $3bn more. It is the second time the entrepreneur can claim credit for the world’s biggest initial public offering, after floating Alibaba itself in 2014.
The combination of a tight ownership structure and confrontational geopolitics ensured it would never be otherwise. But eye-popping as the numbers are — putting Ant on track to raise $34.4bn — the dual listing in Shanghai and Hong Kong is priced to go. Long-term investors should ask why.
The group generated Rmb21.9bn ($3.3bn) of net profits in the six months to end-June. Earnings at Ant and Alibaba, which it was controversially carved out of in 2011, are typically weighted to the second half, including the massive Singles Day shopping festival. Assume — using round numbers — $10bn for this year and shares are valued at 30 times this year’s earnings, a steep discount to PayPal at 49 times.