HONG KONG • Ant Group will close institutional order books of the Hong Kong portion of its record-setting dual initial pubic offering (IPO) ahead of schedule due to strong demand, sources with direct knowledge of the matter said.
The institutional book of the US$17.2 billion (S$23.4 billion) Hong Kong listing was due to close tomorrow, but that deadline will be accelerated to 5pm today in each region, three sources said yesterday.
The book was oversubscribed just one hour after the launch on Monday, according to two separate sources, demonstrating investor frenzy for shares in the Chinese fintech giant that has stoked heavy demand for cash and sent Hong Kong money market rates to five-month highs.
Ant Group declined to comment on the planned early closure of the Hong Kong institutional book.
It is looking to raise up to US$34.4 billion in Hong Kong and Shanghai, with the offer split between the two cities, giving it a valuation of about US$312 billion.
Ant, which runs China's biggest mobile payments platform Alipay, is an affiliate of e-commerce giant Alibaba Group Holding.
It will offer 41.76 million shares, or 2.5 per cent of its total shares in Hong Kong, to retail investors whose demand to buy the stock is expected to be strong.
Hong Kong operates a "clawback" system where heavy oversubscription from small investors can result in them getting a greater share.
Ant's IPO prospectus shows the total amount will be increased to 167.1 million shares, or 10 per cent of the deal, if the initial retail allocation is more than 20 times oversubscribed.
The city's brokers are readying billions of dollars of margin financing to lend to customers to buy the stock. Retail investors need to finalise and pay for the shares they have bid for by Friday, according to Ant's prospectus.
The cash will be locked up until allocations are announced on Nov 4, and brokers expect it could tie up more than HK$1 trillion (S$175 billion) in retail funds.
"The demand is overwhelming... it will smash all previous records," Mr Francis Lun, Hong Kong-based chief executive of GEO Securities, said about retail demand for Ant.
Meanwhile, Hong Kong's money markets tightened yesterday as demand for cash to buy Ant shares pushed up Hong Kong dollar rates. The one-week Hong Kong Interbank Offered Rate (Hibor) jumped nearly 40 basis points to 0.51054 per cent, its highest since late May.
Spot week Hong Kong dollar forwards also hit their most expensive since May.
"Given the size of the IPO... every man and their dog will be trying to get in, and that means a lot of money is going to be locked up which causes a tightening and squeezes the Hibor up," said Mr Khoon Goh, head of Asia research at ANZ Bank in Singapore.
"But once it's over, and whoever is lucky gets their hands on it, the rest of them will have their money returned... the Hibor will drop."