Alibaba’s Ant could be bigger than some Wall Street bankshttps://www.cnbc.com/2020/07/21/alibaba-ant-group-ipo-hong-kong-shanghai-explained.html Ant Group will carry out a concurrent initial public offering (IPO) on the Shanghai Stock Exchange’s STAR board and the Hong Kong stock exchange. The STAR board is China’s push to create a domestic equivalent of the Nasdaq in the U.S.
But, so far, there are no details on pricing of shares.
Ant Group’s last major fundraising event was in 2018, when investors ploughed $14 billion into the company. At the time, the Wall Street Journal reported, citing sources, that the company was valued at $150 billion.
But its valuation could now be as high as $210 billion, according to David Dai, a senior analyst at Bernstein, who carried out his own calculation at the end of last year.
″(The) earnings power of the company has improved after we wrote that report … so I would expect that valuation to go up from that last round of assessment that we did at the end of last year,” Dai told CNBC’s “Street Signs” on Tuesday.
A valuation of over $200 billion would make Ant larger than some of America’s biggest banks including Goldman Sachs and Wells Fargo.
What does this mean for Alibaba?
Alibaba has a 33% equity stake in Ant Group. The e-commerce giant’s Hong Kong-listed shares were up over 5% on the news of Ant’s listing. Investors see the listing as a positive for Alibaba.
“We consider the potential listing of Ant can further unlock its value as a public company,” Jefferies said in a note.
The investment research firm added that based on a $150 billion market capitalization, Ant represents $19 of Alibaba’s American depositary shares (ADS).
Meanwhile, Bernstein’s Dai said Ant Group will be “highly accretive to current share price of Alibaba.”
Alibaba’s U.S.-listed shares closed at $254.81 on Monday. Dai said his current price target on the stock is $290 which could be hit by the end of this year or beginning of 2021.