A Mighty Ant

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Meet the new king of I.P.O.s

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.

How Roark built a restaurant empire

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.

Business school professors have a message for C.E.O.s

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.

Leaving nothing to chance

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)

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