Abu Dhabi, UAEWednesday 12 August 2020

Billionaires: Jack Ma’s Ant Group plans dual listings in Hong Kong and Shanghai

In our fortnightly round-up, one of China's richest men avoids a New York listing and Mukesh Ambani seeks global investors for his retail business

Jack Ma, billionaire and chairman of Alibaba Group Holding. Bloomberg
Jack Ma, billionaire and chairman of Alibaba Group Holding. Bloomberg

Jack Ma

Billionaire Jack Ma’s Ant Group is seeking a valuation of more than $200 billion (Dh734.6bn) as it goes public in Hong Kong and Shanghai, kicking off a much-anticipated market debut for China’s leader in internet finance.

The parent of mobile payments company Alipay said it will pursue a simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. Ant is already more richly valued than most Wall Street companies and, if conditions are favourable, it could seek to raise more in its initial public offerings than Saudi Aramco’s record $29bn haul.

The crown jewel of the sprawling Alibaba empire, Ant has hastened its evolution into an online mall for everything from loans and travel services to food delivery in a bid to win back shoppers lost to Tencent.

Ant’s chief executive Simon Hu said he wants people to think of Alipay as more than just a niche provider of financial services and the payments gateway for the world’s biggest e-commerce platform. Part of that is to grow Ant’s reach in Asia, where it has been working with digital payment providers in India and Thailand, as well as offering its expertise in wealth management and risk controls.

Ant picked China International Capital, Citigroup, JP Morgan Chase and Morgan Stanley for its Hong Kong offering, which could raise about $10bn, sources said.

The Alibaba affiliate is the latest major Chinese company to seek a listing closer to home as increased trade tension makes New York’s capital markets less desirable.

Semiconductor Manufacturing International raised $7.5bn from a Shanghai share sale in July that ranks as the world’s biggest new stock offering this year, according to data compiled by Bloomberg.

Some Chinese internet companies including JD.com and NetEase also added second listings in Hong Kong this year.

“Despite abundant capital, it is not sure how investors would view Ant Group since there are a lot of tech stocks in the market,” said Pamela Chung, managing director and head of IPO at consultancy Hong Kong-based Tricor Group.

While Ant has begun working with bankers on the Hong Kong debut, more advisers could be added at a later stage and details of the offering could change as deliberations are continuing.

Ant, valued at $150bn in its last funding round, generated $2bn in profit in the fourth quarter of last year, based on calculations made from Alibaba’s filing.

Like Alibaba, Ant hit the brakes on its US expansion as tension between America and China escalated. Mr Ma said in 2018 that his promise to create one million jobs in the US was a challenge to fulfil because of the trade row between the two countries.

Instead, Ant has focused on building its presence in the rest of Asia, where it is working with nine payment start-ups, including the owners of Paytm in India and GCash in the Philippines. Domestically, it is expanding into consumer and technology services.

Mukesh Ambani, chairman of Reliance Industries. Courtesy: World Economic Forum
Mukesh Ambani, chairman of Reliance Industries. Courtesy: World Economic Forum

Mukesh Ambani

After raising more than $20bn for his digital venture in three months, billionaire Mukesh Ambani, 63, is preparing his retail unit to welcome global partners as his oil-to-petrochemicals conglomerate turns to India’s billion-plus consumers for growth.

Asia’s richest man and the chairman of Reliance Industries told shareholders that Reliance Retail was receiving enquiries from investors and may start bringing some on board in the coming months.

“We have received strong interest from strategic and financial investors in Reliance Retail,” Mr Ambani said. “We will induct global partners and investors in Reliance Retail in the next few quarters.”

The time has come for a truly global digital product and services company to emerge from India, and to be counted among the best in the world

Mukesh Ambani, Reliance Industries

He identified technology and retail as future growth areas in a pivot away from the energy businesses that he inherited from his father who died in 2002.

Retail is the next frontier for Mr Ambani, who recently sold about 33 per cent of his digital venture to a group of investors including Silicon Valley companies Facebook and Google over the past three months in deals that valued Jio Platforms at $58bn.

Reliance Retail, which runs supermarkets, India’s largest consumer electronics chain shop, a cash-and-carry wholesaler, fast-fashion outlets and an online grocery store called JioMart, reported 1.63 trillion Indian rupees (Dh80.1bn) in revenue in the year through to March 2020. The unit operates about 12,000 shops in about 7,000 towns.

Most of Mr Ambani’s focus during the 93-minute presentation to shareholders was on technology. He unveiled a series of services, including a fifth-generation wireless network as early as next year and a mega video-streaming platform that will bring Netflix, Disney+ Hotstar, Amazon Prime and dozens of other TV channels under one umbrella.

“I believe that the time has come for a truly global digital product and services company to emerge from India, and to be counted among the best in the world,” Mr Ambani said.

Jio Platforms, unveiled last year, is now at the centre of his ambition to tap a billion Indians increasingly embracing mobile devices and data plans to shop online.

The company is focused on an opportunity to shake up the retail, content streaming, digital payments, education and healthcare segments.

Virgin Atlantic founder Richard Branson. AFP
Virgin Atlantic founder Richard Branson. AFP

Richard Branson

It took £200 million (Dh937.4m) of Richard Branson’s own money to secure the rescue of his Virgin Atlantic Airways.

The outlay marks the latest example of the industry’s enduring capacity to shrink fortunes, although the British billionaire may not be surprised, having once said that “if you want to be a millionaire, start with a billion dollars and launch a new airline.”

The airline business has long proved irresistible to a cohort of larger-than-life tycoons. From AirAsia Group’s Tony Fernandes to JetBlue Airways’ founder David Neeleman, some of the world’s most celebrated entrepreneurs have built fortunes shuttling people through the sky.

But with air travel dwindling in lockdown, coronavirus has battered even those long hardened to the volatility and thin margins of the capital-intensive industry.

The market valuations of 10 large, publicly traded airlines linked to prominent magnates tracked by the Bloomberg Billionaires Index have declined in value by $14bn since the year began.

The crisis has already had several victims. Earlier this year, Warren Buffett closed a losing bet on four of the biggest US airlines, acknowledging that the investment had lost money for Berkshire Hathaway. It was his second about-turn after earlier swearing off the sector.

Latam Airlines Group, Latin America’s largest operator whose shareholders include Chile’s Cueto family, sought bankruptcy court protection in New York.

In March, Mr Neeleman — who founded JetBlue and Canada’s WestJet Airlines — unloaded more than 80 per cent of his preferred shares in Brazilian airline Azul after a margin call was triggered on a $30m personal loan.

The crisis has also brought structural issues or simmering tensions to the surface. Norwegian Air Shuttle’s debt load forced it into a restructuring. The discount airline, whose co-founder Bjorn Kos was a former fighter pilot who challenged companies such as British Airways on transatlantic routes, remains highly indebted and issued a warning that it will probably need to raise more capital.

European budget operator EasyJet, which is just emerging from a near-total grounding of its fleet, has also contended with internal strife. Its founder and largest shareholder Stelios Haji-Ioannou launched a failed attempt to oust the executive leadership and block the purchase of Airbus planes which he said EasyJet neither needed nor could afford.

It is possible that the industry may recover quickly enough to staunch some losses. There have been signs that travel demand has begun to look up, fuelling hopes that the stress on beleaguered airlines will ease.

But any return to business as usual is far off. Delta Air Lines revised plans to restore some service after a resurgence in US coronavirus cases undercut a nascent recovery in travel demand.

Even with the restructuring, Virgin Atlantic said it only expected to return to profitability from 2022.

BlackRock chief executive Larry Fink. Bloomberg
BlackRock chief executive Larry Fink. Bloomberg

Larry Fink

BlackRock chief executive Larry Fink sold $24.2m of stock in the world’s largest asset manager, bringing his sales this year to $74.4m.

Mr Fink disposed of 41,706 shares – about 5 per cent of his stake in the business – at an average price of $580.29 on July 21, according to a regulatory filing. The filings did not indicate that his sales this year were made under a pre-scheduled trading plan.

Mr Fink, who is a billionaire and still owns $457m of BlackRock stock, issued a warning this month about an uneven economic recovery despite rising investor confidence buoying second-quarter results at the New York money manager.

“For our economy to be fully operational again, it can’t be this bipolar economy,” the chief executive said. “There has been a lot of healing and that is what the market is reflecting, but there is still a great component of our economy that has not healed and is still struggling.”

Updated: July 26, 2020 02:15 AM

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