Ant IPO and Temasek Holdings

Hailed as the biggest IPO in financial history, the upcoming Ant IPO has generated plenty of hype among the investment community. What makes Ant IPO so unique is the dual listing in Shanghai’s Star Market (China’s answer to US Nasdaq) and Hong Kong Exchange. The listing also takes place against the backdrop of a bitter trade war between US and China.

Many analysts had valued Ant IPO between USD250 billion to USD300 billion. At such valuations, Ant IPO would easily surpass Aramco’s USD29 billion IPO in December 2019. Given the investment moats and financial performances of Ant Group, such valuations are not surprising to me.

The flagship product of Ant is Alipay, a super online payment app. The scale of Alipay is simply mind-boggling – 711 million monthly  active users, 80 million monthly active merchants and more than 2000 partner financial institutions. Essentially, Ant is a fintech but unlike many technology companies like Uber or Grab, Ant is very profitable. This is one of most appealing aspects of the Ant IPO.

Ant’s digital finance business in China is also unparalleled, occupying the top market positions in China for its CreditTech, InvestmentTech and InsureTech. Based on these factors, I am of the view that Ant IPO will be a success. But whether the valuation will hit the range of USD250 billion to USD300 billion is a big question mark. Such valuation is simply outrageous to me but then again, stock market is always out of whack and totally unpredictable.

Ant IPO the biggest financial IPO in history?

Singapore’s sovereign wealth fund, Temasek Holdings, is an early backer of Ant. Through its wholly-owned companies, Evans Investments and Glittertind Investments Pte. Ltd, Temasek Holdings owns about 89 million shares in Ant Group. Should investors join in the fun with Temasek Holdings and participate in the Ant IPO?

While it is easy to get carried away with Ant IPO, investors should be wary of potential market corrections. As retail investors, you certainly do not want to be caught with your pants down. Due to COVID-19, US Federal Reserves had slashed interest rates and injected tremendous liquidity into the securities market. Much of the liquidity had flowed into technology stocks, leading to Nasdaq to reach historical highs.

Many analysts and bloggers have claimed that technology stocks are now in the midst of a bubble and a correction for technology stocks is looming. While I do not disagree with such a view, I think Ant IPO could be an interesting one. Ant enjoys a very strategic and synergistic relationship with e-commerce giant, Aliababa. So if you think that e-commerce will be the future, then Ant IPO may be worth taking a look.

Looking at the recent performance of Alibaba share price in HK Exchange, I think Ant IPO in HK Exchange should do well. A word of caution for retail investors looking at making a quick buck from Ant IPO is to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: September 30, 2020 — 9:42 pm

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