manages a fund of 500 million US dollars , asked everybody, but the answer was often no.
He was born in a top domestic investment institution. Last year, he chose to leave his job to start a business and do wealth management. In addition to providing daily wealth management services, Li Shuyang focused most of his energy on new stocks and grabbing shares of international placements. He was waiting for Ant’s listing. Long- term opportunity- China's mobile Internet has been surging in ten years, and there are not many huge and unlisted technology companies. Ants are undoubtedly the most watched big fish.
According to international practice, most of the fund-raising quota for a company's listing will be given to international institutional investors, and only a very small proportion is given to retail investors for public offerings. Due to the large allocation quota and the high success rate, many professional funds will set their sights on this.
Taking Ant Financial as an example, according to the scale of the first issue of 1:1 (evenly distributed on the Science and Technology Innovation Board and the Hong Kong Stock Exchange) and 80% of the A-share allotment proportion, according to the previous media report of 35 billion US dollars of fundraising, In this IPO, only the institutional allocation quota for A-shares of Jinfu is 14 billion US dollars.
This is an opportunity that institutional investors see. "It can not only make money, but also expand the scale of fund management, with good reputation and income." Li Shuyang has great expectations for this listing of Ant. But expectation is only expectation .In 2 months, he used almost all the resources he could use, but still failed to grab the quota. "The relationship is still not strong enough, it is not good enough, I can only rush to buy new ones with retail investors," Li Shuyang sighed.
"Relationship" has become the key word in this battle for wealth. A person familiar with the matter told 36 krypton, "(The intermediary relationship) has far exceeded the scale of capital management, industry status and investment attitude in this share competition. If it doesn't matter, even if it doesn't matter, you can't grab it."
Not to mention that small funds like Li Shuyang with only US$500 million in assets under management, even top PE and sovereign funds as large as Temasek, Warburg Pincus, and even the Canadian pension fund and Singapore GIC have hardly accounted for this battle. Any advantage.
"Mystery" is another key word for Ant's IPO. In the 36Kr interview, most of the interviewees said that Ant’s confidentiality work was very good this time. Even the lead underwriter was only responsible for a certain part of the IPO, and none of them understood the full picture of Ant’s IPO. Many of the institutions that have participated in investing in Ants are even ignorant and can't find out any news.
But the more mysterious, the more organic ideas squeeze in. Some investment bankers even said that some of Ant’s measures have frustrated and even confused some banking professionals and investors.
Recently, Ant Financial, which has gone public, seems to be in trouble. Because of the "exclusive sale of strategic allotment funds", it was frequently exposed to the public eye, and it was even reported that "IPO was postponed".
However, this does not affect the organization's enthusiasm for participation. According to people familiar with the matter, Ant Financial’s current international allotment quota has basically been robbed, and it will be publicly offered on October 29 at the earliest. Intermediary brokers such as Futu and Tiger, as well as Hong Kong banks are also waiting, and a carnival feast has already begun.
Mysterious and special IPO
In the eyes of the outside world, Ant's listing this time is of great concern. With the aura of the world's largest IPO, record-breaking speed of review, an unprecedented strategic placement fund of nearly 60 billion yuan, and backing by Alibaba Group, these have given Ant enough exposure.
But in the eyes of investment banks, Ant's IPO is low-key and mysterious. Several people familiar with the matter told 36Kr that during the IPO process, Ant took many peculiar measures, such as requiring investment bankers to sign a personal confidentiality agreement, and even asking investors participating in roadshows to explain why they were allowed to participate in meetings.
A Hong Kong-based fund manager once told Reuters that an investment bank underwriting the Ant Group’s IPO told him that before entering the meeting, he would be asked to fill out a document describing his interest in the Ant company. Allowed to participate in the road show. The fund manager now holds shares in Ali, which he has never encountered in previous IPO cases.
In the eyes of industry insiders, this part has borrowed from Ali's previous listing practices. When Alibaba went public on the New York Stock Exchange in 2014, Alibaba split the IPO work so that no investment bank can fully control the entire IPO process. In the secondary listing in Hong Kong last year, Ali took the same approach.
Generally speaking, as the lead underwriter, the investment bank will have an overall understanding of the company’s listing process. However, many people familiar with the matter said to 36Kr that the listing of Ants was done on the Science and Technology Innovation Board and the listing part of the Hong Kong Stock Exchange. Strict distinction (may be due to regulatory considerations), the scope of the investment bank's functions has also been reduced to a certain extent, especially in the counseling stage and the right to speak in order distribution.
Ant has adopted the strategy of simultaneously listing on the Hong Kong Stock Exchange and the Science and Technology Innovation Board. According to 36 krypton, Ant has hired Citibank as the international lead underwriter for the IPO, while CICC is responsible for the domestic IPO. Other underwriters include JPMorgan Chase, Morgan Stanley (responsible for the international part) and CITIC Securities (mainly responsible for the IPO of the Science and Technology Innovation Board). In terms of fund-raising allocation, according to Ant's latest announcement, the Science and Technology Innovation Board and the Hong Kong Stock Exchange will be evenly distributed, reaching nearly 17.5 billion US dollars respectively.
People familiar with the matter revealed to 36Kr, “ Morgan Stanley and JP Morgan Chase joined later. The former only did the business analysis part of the prospectus, and the latter only did a little financing risk analysis. The understanding of the process is also far worse than other (participated) cases."
It should be noted that before becoming an ant underwriter, CITIC Securities participated in the IPO of JD Digital as a counseling agency , but later withdrew midway. "Obviously, it is more optimistic about the prospects of Ant listing. A larger volume means more underwriting income." A person familiar with the matter said. Many investment banks that are too closely related to Tencent have also been excluded from the scope of this underwriter, such as Goldman Sachs Group.
In addition, Ant also specially hired a financial advisory company called Ampere Partners for its listing on the Hong Kong Stock Exchange. The two founders were both executive directors of Morgan Stanley before leaving, and they have extensive contacts in the industry—— In addition to hiring many underwriters, financial consultants are also hired, which is rare in previous IPO cases.
Some people in the industry said that this is probably related to the huge amount of fundraising. "According to half of the fundraising amount (17.5 billion US dollars) allocated to the Hong Kong Stock Exchange, this is unprecedented in the history of the Hong Kong Stock Exchange. Ants need to find more institutions to help them sell the quota."
According to the rules of the Hong Kong Stock Exchange, the financial advisory company is responsible for underwriting, including but not limited to issuing equity, issuing rights issue, and executing distribution. It must ensure that there are sufficient financial resources to meet the underwriting requirements, which is slightly different from the role of the lead underwriter. To put it simply, what the financial advisor has to do is to bring enough "receivers" for Ant Group, and even find enough cornerstone investors.
But apparently the ants underestimated their popularity.
As soon as the news of the IPO came out, the Saudi Public Investment Fund said it would invest hundreds of millions of dollars to become a cornerstone investor. According to public sources, five of the world’s top ten sovereign wealth funds have clearly expressed their desire to participate in the IPO of the Ant Sci-tech Innovation Board, including Temasek, Singapore Government Investment Corporation GIC, Abu Dhabi Investment Authority, Saudi Public Investment Fund, Canadian Pension Fund Investment etc. China Social Security Fund has determined to become Ant's strategic investor in the Science and Technology Innovation Board.
Since there is no conflict in the subscription of shares between the Science and Technology Innovation Board and Hong Kong stocks, these investment institutions have made preparations for simultaneous subscriptions in both places, so as to "get as many shares as possible." Some institutional sources revealed.
But the actual situation is far more intense than imagined.
The battle for share
How fierce are ants grabbing their share?
A person familiar with the matter told 36Kr that an investment bank, a family fund with assets of 5 billion U.S. dollars, once asked for hundreds of millions of U.S. dollars from Ant with full confidence, but was tactfully rejected by Ant, and finally only got a quota of 10 million U.S. dollars. , Which is almost negligible compared to the US$14 billion international allocation quota on the Sci-tech Innovation Board. "You have to know that such a fund management scale is already very large in Asia, and it is not small even in Europe and the United States."
According to people familiar with the matter, if the Ant IPO wants to get the quota, the assets under management of the institution will start at 3 billion U.S. dollars, and many of them rely on strong relationships to directly find the core executives of Ali and Ant.
Although many cases in the past also needed to rely on relationships to grab international allocation quotas, the particularity of ants lies in the extremely exaggerated money-making effect brought about by “relationships”.
Some investment bankers told 36 krypton that before, at the level of profit distribution (after grabbing shares), the normal situation was that the funder (equivalent to LP) took 75-80% and participating institutions took 20-25%. But in Ant’s case, a rare "333" distribution mechanism appeared, that is, the funder took 1/3, the intermediary relationship took 1/3, and the participating institutions took 1/3. This is unprecedented. See you.
Based on the total of 3.34 billion outstanding shares and 35 billion US dollars of funds raised by Ant this time, the issuance price is roughly estimated to be 70 Hong Kong dollars per share. With reference to the popularity of technology stocks on the Hong Kong Stock Exchange this year, we conservatively estimate the market value of Ant within six months. With an increase of 50%, the brokerage fee may reach 1 billion US dollars.
"Although there are many organizations complaining, but you are not willing, there are a lot of people willing, this group of brokers with strong relationships definitely made a crazy profit in this IPO." The above-mentioned investment banker said.
A top international PE that participated in Ant Financial’s last round of financing also asked Ant for a quota of nearly 100 million U.S. dollars at the beginning of the IPO, but was also rejected. The reason given by Ant is that "old shareholders do not need to squeeze the quota, (the quota) needs to be allocated to more long-term funds in the secondary market."
Since then, investors involved in the project have tried many times, but ultimately failed. According to the investor, “Many institutions that participated in Ant’s previous round of investment did not get the quota. Temasek originally wanted to invest another 300 million US dollars, but Ants could only give up to 20 million US dollars.”
In Ant Financial’s last round of financing, Temasek was also one of the investors. According to the prospectus, Temasek’s equity in Ant Financial accounted for less than 1%. Based on Ant’s $250 billion valuation, Temasek’s The value of some equity has reached nearly 2.5 billion US dollars.
In the eyes of market participants, it has been extremely rare in the past to refuse to grant existing shareholders a quota for IPO. Especially in such large cases, the support of old shareholders is extremely important for the later stability of the company's stock price, but Ant does not seem to be worried about this.
The investment bank also suffered setbacks in the IPO of Ant. Although the big case was successfully robbed, the right to speak has been severely weakened compared to the past.
According to 36 krypton, some banks participating in the IPO did not even know that the Hong Kong portion of Ant's IPO would not have cornerstone investors at first (Although Ant hired a financial adviser to try to find cornerstone investment, but because of the fierce share grab in the later period, Cornerstone investment is no longer important, and ants will not emphasize it anymore). After learning about the halfway through selling orders to institutions, many investment banks had to change their sales strategies and order placement mechanisms.
A person familiar with the matter told 36 krypton that on the eve of Ideal Auto's IPO, CEO Li Xiang and CFO used their mobile phones to compare the list of funds participating in the international allotment. "Does this fund contact me? What help can it provide the company? The quota is allocated within a few minutes, and the investment bank is only responsible for recording which one is ultimately left behind."
This situation also frequently appeared in the previous housing search in Shell , the IPO of Xiaopeng Automobile, and the secondary listing of JD and NetEase in Hong Kong. Because there are too few good companies and fierce competition, the investment bank's voice this year has been weakened. "But at least in the early stage, these companies will follow the advice of investment banks and let some big funds come in. In contrast, Ants are much stronger."
Many sources said that (Ant) the right to speak in the allocation of quotas this time is completely in the hands of Ali and Ant’s core high-level personnel, only the information is passed directly to the highest level, and that it has maintained a close relationship with Ali for a long time. It is possible to get it.
It is reported that Ali has reserved a certain subscription share for institutional investors in Jack Ma’s circle of friends, especially some insurance groups with government backgrounds that participated in Ant’s early investment. At this time, the reference significance of the previous configuration recommendations of investment banks has been very limited.
According to 36 krypton, because of the possible wealth-making effect that Ant’s listing may bring, many investment institutions that can’t grab the share are already preparing to move to the public offering part and participate in the new venture together with retail investors. "In principle, institutions are not allowed to make new ones. Many of them use physical shells and take money from outside the institution to participate." A person familiar with the matter told 36 krypton.
Retail investors, brokerages, and financing companies are also crazy
The quotas allocated by institutions have been robbed. Do retail investors and brokers still have meat to eat?
According to the issuance arrangement, before the call-back mechanism and the launch of the "green shoes", the online and offline "new" shares of Ant's A-share issuance reached 334 million shares. Based on the market value of 250 billion US dollars, its A shares "new" The quota will reach 20 billion yuan, and according to industry forecasts, its new quota on the Hong Kong Stock Exchange is likely to exceed 20 billion.
According to the rules of the Hong Kong Stock Exchange, if the public offering exceeds the purchase price by more than 15 times but less than 50 times, the portion of the public offering will increase to 30%, which means that the ratio of the original public offering to institutional placement of 1:9 will be adjusted to 3: 7. But if the amount of funds raised is huge (usually more than 20 billion Hong Kong dollars), the company can apply to the Hong Kong Stock Exchange for exemption from the above regulations.
Take Xiaomi Group as an example. The total amount of funds raised for Xiaomi's Hong Kong IPO is 37 billion Hong Kong dollars, but the company sets the initial public subscription issuance at 5%. Even if the over-purchase is more than 100 times, the ratio is only 10%.
According to Wu Biwei, President of Futu Securities Finance and Corporate Services, Ant's ability to absorb funds will definitely exceed Nongfu Spring. Prior to this, Nongfu Spring’s public offering was over-buyed by 1147 times, and ultimately frozen capital of 677.7 billion Hong Kong dollars, becoming the historical frozen capital king of Hong Kong stocks.
On a Futu platform alone, Nongfu Spring’s subscription amount exceeded 35.19 billion Hong Kong dollars, and more than 116,000 people subscribed. Ant’s frozen capital is likely to exceed one trillion yuan, which is huge for Hong Kong banks and intermediary brokers. test.
In order to avoid capital shortages, some wealth management companies in Hong Kong have already advised their clients to reduce or even liquidate some of the stocks they hold in order to gain more opportunities for ants to make new successes. "There are also some Hong Kong banks that have suspended some other loan businesses since August to set aside enough funds to meet the huge capital needs that Ant listing may bring," a Hong Kong wealth fund official told 36Kr.
A banker based in Hong Kong also told the media, “If this is the world’s largest IPO, wealth management managers must do everything possible to get customers to the front row.” He also said that for an IPO of this size, only By increasing the scale of bidding to increase the chances of stock placement, this can only be achieved by "increasing leverage" (margin financing and securities lending with several times the principal amount).
Take Futu as an example. As the main underwriter of the ant public offering, Futu has prepared a financing line of 30 billion yuan for investors participating in the launch of Ant Hong Kong stocks, of which 25 billion came from local banks in Hong Kong and provided 10 times leveraged finance, tiger securities more exaggerated, given the 20 times leverage financing.
In response to the problem of not being able to grab the amount of financing from the previous time, Futu has also prepared two sets of appointment quota plans for ordinary customers and high-net-worth customers. Ordinary customers can make reservations up to 2 million. All of this is in preparation for the upcoming public offering.
As a once-in-a-lifetime super IPO, Ant Financial's special feature is that it will be listed on the Science and Technology Innovation Board and the Hong Kong Stock Exchange at the same time, which is the first time in history. According to the law of the past few years, whether it is A-shares or Hong Kong stocks, companies that are consistently favored by the market, especially technology stocks, are likely to see double-digit or even triple-digit gains on the day of listing.
Especially on the Sci-tech Innovation Board, SMIC opened up 245.96% on the day of its second listing on the Sci-tech Innovation Board , with a turnover of 47.97 billion yuan throughout the day; the HKUST National Shield Quantum Sci- Tech Innovation Board also created a myth of 10 times increase on the day of its listing. You can earn 180,900 yuan in the first sign.
In the opinion of investment bankers, since the new stocks on the Sci-tech Innovation Board do not have a price increase or decrease 5 days before listing, and Hong Kong stocks originally have no price limit, this gives investors plenty of room to speculate on ants. "Especially on the Science and Technology Innovation Board, although the market share is small, because of the rule of skyrocketing at the opening of the market, (ants) will definitely be smashed in the first few days of listing."
But this also brings some hidden worries. Some market participants said to 36 krypton that Ant Financial’s huge ability to attract gold is likely to affect the liquidity of the entire market. Especially for the Sci-tech Innovation Board, investors are likely to flock to Ant Financial under the condition that the market standard is generally of poor quality, which may trigger a panic on the entire Sci-tech Innovation Board.
The latest news is that Ant initially plans to open a public offering on October 29 and plans to list A+H shares simultaneously on November 6. The retail carnival is also coming.
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