(ATF) Ant, the financial arm of Alibaba Group, is organising the world’s largest IPO in Shanghai and Hong Kong. The move shows that China’s big IPOs are moving to Asia – away from New York, and US sentiment has proved rather negative.
US President Donald Trump clearly hoped to throw a spanner in the works. Bloomberg News reported on Wednesday that the White House was considering curbs on Ant and Tencent over concern that their payment platforms threaten national security.
The restrictions, if implemented, would illustrate how the Trump administration wanted to stop Chinese companies from embedding themselves in the US financial system before they become a significant competitive threat.
On Friday October 9, China Foreign Ministry spokesman Hua Chunying responded to this news, saying that some people in the United States have been generalising the concept of national security and abusing their national power. This was a typical government-coerced move by the US, Hua said, that was "no different from modern pirates" – now targeting Ant Group and Tencent.
But the Trump salvo seemed too late and badly thought out to impact fundraising that primarily targets Chinese citizens.
On Thursday evening (Oct 8), Brokerage China reported that all five of Ant's matching funds had successfully raised the capital they sought in record time.
Investors E Fund, Penghua, China Europe, China Universal Asset Management, and China Innovative Futures closed hybrid fund were all locked in as anchor funds for the next 18 months.
A tsunami of cash
According to the data provided by the Ant platform, five Ant match funds subscribed more than 10 million customers, which was equivalent to eight investors buying every second. Based on a simple calculation of the total raised – 60 billion RMB, the per capita subscription amount for the 10 million investors is 6,000 yuan. To be an investor, the Shanghai board insists on some qualifications, such as people having two years' investment experience.
There has been some internal fighting between Chinese financial institutions. The five funds were exclusively issued on the Ant channel, leading to bit of a melee this fall.
In Jack Ma's words, "If the bank does not change, we will change the bank" appear to be the guiding ethos behind Ant Finance.
This time traditional channels keenly sensed the crisis and took the initiative to fight it with their own funding drives, and the battle for fund channels has been intense, China Brokerage reports, with China Merchants Bank being most aggressive on the ‘counter-attack'.
According to the data provided by Ant, the number of subscribers for three funds – Penghua, China Universal and China Innovative Future Hybrid Fund – all set a new fund issuance record. The previous record holder was a QDII fund - the China International Investment Morgan Asia Pacific Advantage Fund.
In the first three quarters of this year, the total number of newly issued funds in the market exceeded 2.3 trillion yuan, with equity funds issuing some 1.5 trillion yuan of this amount. This set a new record for fund issuance, plus sales of Ant Match Funds during the National Day Holiday were new.
In the marketing campaign by the Ants Match Funds, a live broadcast became the most important supportive marketing tool. According to data from Alipay, five Ant strategic placement funds opened 118 live broadcasts for the new fund roadshow, and these were watched by over 70 million people. They also took turns to answer questions for investors during the holidays. The National Day of China Fund will be broadcast continuously for eight days, for four hours each day.
Ant funds confront the bank again
Since the approval of the five Ants Match Funds, Ant Group and the five fund companies have launched a comprehensive, multi-level, and three-dimensional publicity campaign. Video advertisements on office building elevators, bus stations, subways, and airports were abundant, while some investors got recommendations from Alipay wealth management assistants by phone. The popularity, frequency and format of marketing was unprecedented.
Traditional channels did not sit idly by. The head office of China Merchants Bank decided to issue the China-Europe Internet Fund managed by Zhou Yingbo earlier than planned, and the time was also set on the day of the sale of the Ant Matching Fund. The goal was to target Ants and strive to "fight to the end."
Monetary funds have been put on a "tightening curse" in China due to liquidity risks, and traditional banks have resisted a wave of offensives by "babies" – smaller organisations such as Ant. Once again, ants are aggressive, meaning that banks have millions of customers and hundreds of billions of funds which the Ant Funds want to eat into.
However, the Ant Group obviously does not want the sales of the Ant Match Funds to be interpreted by the outside world as "moving the cheese of the bank." It is diluting the competitive relationship between the two parties.
In regard to the battle between ants and banks and other traditional channels, Wang Jun said: “The service groups of the two parties are not the same. As far as fund business is concerned, our existing stock-fund-user orders are all below 10,000 yuan. These users are not the same as those of banking services."