Alibaba’s Ant Group Starts Filing Process For Blockbuster China IPO

Alibaba’s fintech arm Ant Group has started the process to dual list in Shanghai and Hong Kong.

The group, China’s biggest mobile payments company, has now made a preparatory filing with China’s securities regulator, according to a report from Reuters.

Meanwhile China’s Caixin states that Ant Group is hoping to sell 10% of its shares on Shanghai’s Nasdaq-like STAR board and 5% on the Hong Kong Stock Exchange.

BABA currently owns 33% of Ant, while Alibaba (BABA) co-founder and former executive chairman Jack Ma owns 8.8%, but with over 50% of voting power.

According to Reuters, Ant is seeking a valuation of over $200B in the initial public offering (IPO). That’s slightly below the valuation calculated by Oppenheimer analyst Jason Helfstein, who writes that his sum-of-the-parts-valuation currently values Ant at $210B.

He has just reiterated his buy rating on BABA with a price target of $290 (up from $260 previously). With shares in Alibaba up 20% year-to-date, his price target suggests 14% upside potential lies ahead.

“While it is difficult to discount the impact of worsening US/China relations, we believe BABA remains well positioned” the analyst writes, adding that Ant Group’s dual-listing IPO plan should unlock value for BABA.

According to National Bureau of Statistics (NBS), e-commerce penetration reached 29% in June, on COVID-19 tailwinds, up 6% y/y, vs. +2%/ +4% in 2019/2018. (See Alibaba stock analysis on TipRanks).

“We believe the penetration increase is sustainable, as new buyers appreciate convenience and existing buyers expand purchasing categories” the analyst told investors on August 10.

Overall, BABA stock shows a bullish Strong Buy analyst consensus with 19 recent buy ratings vs 1 hold rating. The average analyst price target stands at $280 (10% upside potential).