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Why Ant Group’s I.P.O. Is Set to Be the World’s Largest



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ImageAnt’s Alipay mobile payment service has more than 730 million monthly users.
Credit…Alex Plavevski/EPA, via Shutterstock

The Chinese financial tech titan Ant Group is set to break the record for an initial public offering with a $34 billion haul. Here’s why it’s raising so much money, how it’s doing it and what it means.

Ant is basically one of China’s biggest banks, even without a single branch. Ant’s Alipay mobile payment service has more than 730 million monthly users. It handled over $17 trillion in digital payments in the year to June (that’s trillion, with a “T”). It also offers a mutual fund, insurance brokerage and many other services. To put that in perspective:

  • Alipay has more than twice the number of active accounts of PayPal, and it handled far more payments than the $712 billion that PayPal did last year.

  • Ant’s systems processed 459,000 payments a second at the peak of the Singles Day shopping holiday in China last November. By contrast, Visa says it can handle 65,000 transactions a second.

  • Ant’s I.P.O. valuation of $313 billion puts it in the same league as Mastercard ($319 billion) and JPMorgan Chase ($309 billion). Ant raised money privately in 2018 at a valuation of $150 billion.

Ant’s listing reflects a shift in capital to China. Ant’s shares will trade on the Shanghai and Hong Kong stock exchanges starting next week, following the trend of big Chinese tech companies choosing to list in their home country rather than in the U.S. Shanghai, Hong Kong and Shenzhen account for just under half of all I.P.O.s so far this year.

  • The company’s co-founder, the billionaire Jack Ma, crowed on Saturday that Ant’s debut would be “the first time that such a big I.P.O. was priced outside of New York City, which we wouldn’t have dared to think about five, or even three years ago.” Even after Ant goes public, Alibaba will own a third of its shares and Mr. Ma and other top executives will still control nearly 40 percent of the company.

Investor demand is huge. Beyond bragging rights, Ant is raising so much money because it can. Both the Shanghai and Hong Kong offerings were heavily oversubscribed, with retail and institutional investors clamoring for shares. “Every man and their dog will be trying to get in,” Khoon Goh, head of Asia research at ANZ Bank, told Reuters. The listing is also a fee bonanza for underwriting banks, which include Citigroup, JPMorgan and Morgan Stanley.

  • If all goes to plan, four of the world’s five largest I.P.O.s will be Chinese companies.

But Ant faces challenges at home and abroad:

  • Ant generates virtually all its revenue from mainland China. It gained its dominant position by acting as a disrupter, but now relies more heavily on Beijing’s good will, The Times’s Ray Zhong and Cao Li write. Chinese officials have been clamping down on finance, so Ant’s future may look more like a heavily regulated utility than a buzzy innovator. “Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Fraser Howie, the co-author of “Red Capitalism,” told The Times.

  • It’s unclear how much traction Ant can get outside Asia, particularly if it becomes embroiled in the spiraling U.S.-China cold war. The Trump administration has weighed blocking Ant from operating in the U.S. In 2018, it prevented Ant from acquiring MoneyGram over security concerns. China is undoubtedly a huge market — but is it enough alone to justify Ant’s heady valuation?

Today’s DealBook newsletter was written by Andrew Ross Sorkin and Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

Amy Coney Barrett is sworn in as a Supreme Court justice. Senate Republicans confirmed her with a 52-48 vote, cementing a conservative majority that could affect business and social issues for decades.

A study suggests only limited immunity to Covid-19. The survey of 365,000 adults in England showed a 26.5 percent decline in the proportion of positive antibody tests from June to September. That suggests any natural immunity to the coronavirus may be short-lived.

A.M.D. will pay $35 billion for fellow chip maker Xilinx. The all-stock deal, announced this morning, will give A.M.D. a bigger presence in chips for 5G wireless networks and cars, and help it counter rivals like Nvidia in fast-growing markets.

HSBC plans major changes. The bank said it would slash costs more aggressively as its third-quarter profit fell 35 percent. It also warned that it might start charging fees for some products, like checking accounts, that are currently free.

Apollo’s biggest backers are reconsidering their investments. After The Times revealed previously unreported ties between the private equity group’s C.E.O., Leon Black, and Jeffrey Epstein, a convicted sex offender, a number of pension funds told Times reporters that they were awaiting results of an internal investigation before acting.

Roark Capital is in the news, after The Times reported that its Inspire Brands restaurant business is in talks to buy Dunkin’ Brands for nearly $9 billion. Here’s a primer on the Atlanta-based investment firm:

Empire builder: Roark bought Arby’s for $430 million 2011 and used the company to amass a portfolio of “quick service restaurants.” After it closed a $2.9 billion acquisition of Buffalo Wild Wings in 2018, it merged the businesses to create Inspire Brands. Inspire has since bought chains like Sonic and Jimmy John’s (which it acquired from another part of Roark’s portfolio). Inspire now employs more than 325,000 people, operates more than 11,000 restaurants and generates almost $15 billion in annual sales. Though backed by Roark, it has also raised its own funds through family offices and other investors.

Private equity with a Southern touch: Roark was founded in 2001 by Neil Aronson, who started his career in the hospitality industry. Described by bankers as more low-key than the stereotypical New York financier, he named the firm after the protagonist in Ayn Rand’s “The Fountainhead.” Since its beginning, Roark has focused on franchised businesses, like Auntie Anne’s, Batteries Plus, Carvel Ice Cream and Cinnabon. It’s held many of those purchases longer than the typical private equity investor — in some cases, for more than a decade. Still, it has had notable exits, like the well-received I.P.O. of Wingstop in 2015. Roark’s increasingly ambitious deals have enticed more bankers from New York to make the trip to Atlanta to get in on the action.

In an open letter published yesterday, more than 600 business school professors — including the Nobel laureates Alvin Roth and William Sharpe, as well as Angela Duckworth, Bill George and Adam Grant — declared opposition to President Trump “an act of conscience” for corporate leaders. They are weighing in on the increasingly contentious debate over how much business and politics should mix in these hyperpartisan times.

“‘Stay in your lane’ is a good metaphor for ‘business as usual,’” said Deepak Malhotra, a Harvard Business School professor who drafted the letter. He said that the professors were modeling behavior for others who may want to engage: “We’re not just scholars. We’re their teachers.”

  • Professor Malhotra, a negotiations expert, knows that sharp language will convince some and repulse others, and he said that he wasn’t trying to sway voters. “It’s a call to action for business leaders,” he said. “They recall that we haven’t made this ask before.”

Others are taking sides — or actively choosing not to. David Barrett, Expensify’s C.E.O., recently sent an email to 10 million customers, stating that “anything less than a vote for Biden is a vote against democracy.” That contrasts with executives like Coinbase’s Brian Armstrong, who took a stand by discouraging anything “unrelated to our core mission” at the workplace, stressing that politics isn’t their business.

This week, DealBook is highlighting how corporate America is preparing for a momentous election. Today, MGM’s C.E.O., Bill Hornbuckle, tells Lauren Hirsch how Nevada’s largest employer is encouraging its workers to exercise their voting rights.

Bill Hornbuckle says it’s important for every employer, particularly large ones, “to step up and step in” when it comes to encouraging people to vote. “It’s really important to us that people understand the issues at stake because they impact them and therefore their employment,” he adds.

The mega-casino operator has always encouraged employees to vote, but is providing more material this year about mail-in ballots. It created animated infographics for screens and put up posters in English and Spanish in employee-only areas. It has run video messages on the company’s in-house app — “Voting is your chance to stand up on the issues you care about, like public transportation, raising the minimum wage or local public schools,” says the host in one — and workers can block off time to cast their ballots.

It’s a fine line, Mr. Hornbuckle says. “We have employees and customers on both sides of the aisle,” he adds. “We don’t do anything that publicly positions us to be a lightning rod.” Still, MGM is not shy about taking a stand on certain issues, like supporting a bill limiting corporate liability for coronavirus outbreaks if companies follow certain safety procedures and policies. When signing the bill, Gov. Steve Sisolak of Nevada described it as critical to “our state’s economic survival.”

As the pandemic ravages the hospitality industry, Mr. Hornbuckle says he gets messages directly from struggling employees. The company laid off roughly 18,000 workers in August. Mr. Hornbuckle worries about the broader economy without another round of federal stimulus (MGM and other big casino companies weren’t covered in the first round). “The underpinning of the economy and jobs right now just isn’t there,” he says.

The stakes, then, are high. MGM also has protocols for potential for unrest along the Strip after the election, Mr. Hornbuckle says. “We work with the local Metro department, police authorities, that kind of thing,” he says. “I would hope it won’t rise to that — but we’re not going to be naïve about it. And we’ll be prepared.”


  • Sheldon Adelson’s Las Vegas Sands is reportedly considering selling some resorts, including the Venetian and Palazzo, for more than $6 billion. (Bloomberg)

  • The E.U. has cleared LVMH’s $16 billion takeover of Tiffany, but the deal remains mired in legal fights in Delaware. (Reuters)

  • Shares in Lordstown Motors, the latest electric vehicle company to go public by merging with a SPAC, surged in their debut yesterday. (Markets Insider)

Politics and policy

  • President Trump’s policies have often undercut his promises of an American manufacturing renaissance. (NYT)

  • Democratic donors are pushing Mike Bloomberg to pour money into contested Senate races, but he appears reluctant. (CNBC)


  • Elon Musk is eligible for the latest tranche of his Tesla compensation package, allowing him to buy shares worth $3.55 billion at a steep discount. (Business Insider)

  • Airbnb is racing to address its “party house problem” as it prepares to go public. (NYT)

  • A recent $100 million bribery scandal shows deeper problems with Amazon’s relationship with its third-party merchants. (Recode)

Best of the rest

  • Despite the recession, many American households are doing better than expected. (NYT)

  • A dispute between the billionaire bond investor Bill Gross and his neighbor features the “Gilligan’s Island” theme song on a loop. (L.A. Times)

  • Kazakhstan has changed its tune: Borat is now “very nice.” (NYT)

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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