China's top security regulator approved the Shanghai leg of fintech unicorn Ant Group's initial public offering on Wednesday, the final regulatory hurdle for what is likely to be the world's biggest IPO ever.

Ant also revealed in filings: key dates for its IPO; an even share split between Hong Kong and Shanghai; updated its financial results; the latest number of its mobile payments app users; and a new strategic investor.

Hangzhou-headquartered Ant will not float its shares before the US election on November 3 when markets could be turbulent but did not specify on which day it will make its public markets debut.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

The dual listing of Ant, the world's most valuable privately owned company , is expected to surpass the record set by state-owned energy giant Saudi Aramco's US$29.4 billion IPO last year.

CSRC's office building located at Beijing's Financial Street in downtown Beijing, China. Photo: Simon Song alt=CSRC's office building located at Beijing's Financial Street in downtown Beijing, China. Photo: Simon Song

"Sixteen years ago, Ant Group was founded on the dream that in the future, financial services would not only benefit a select few but serve all ordinary people in their daily lives, all the time, " said Eric Jing, Ant's executive chairman. Ant now provides one billion consumers and 80 million small businesses in China with the convenience of technology-enabled finance, he added in a letter to investors seen by the Post.

For the first nine months of the year, Ant's revenue was 118.191 billion yuan (US$17.77 billion), up 42.56 per cent on the same period last year, despite the coronavirus pandemic weighing on consumption domestically in China in the early part of the year. Gross profit climbed to 69.549 billion yuan, up 74.28 per cent year-on-year, and profit margins expanded to 58.8 per cent versus 48.1 per cent a year earlier, according to the A-share updated prospectus.

Alipay, China's largest third-party mobile payment app by volume, saw its monthly active users swell to 731 million as of September 30, up from 711 million as of June 30.

How to conduct a dual IPO in Hong Kong and mainland China

Key dates in the share sale will be: October 22 for initial price inquiry announcement followed a day later by initial price inquiry. October 27 is the offering announcement, October 29 is the share subscription and November 2 is completed payments for subscribed shares. This schedule means Ant will not list before the US election on November 3.

Ant is selling between 11 per cent and 12.4 per cent of the company post listing. The total number of new A-shares to be sold is no more than 1,670,706,000, that is about 5.5 per cent of the total outstanding A plus H-shares after the IPO. Including the greenshoe, the number of shares rises to 1,921,311,500 billion, or 6.22 per cent of the company.

Ant will issue the same number of new H-shares and the total number of shares post listing will be no more than 30,376,487,820 pre-greenshoe. The total shares to be sold will include 3,256,446,324 H-shares of class B and class C shareholders of Ant International.

Ant will sell 1,336,564,800 shares to strategic investors, or 80 per cent of total A-shares pre-greenshoe. If the greenshoe is fully exercised then the strategic investors' allotment falls to 69.7 per cent of A-shares. A wholly-owned unit of e-commerce giant Alibaba Group Holding, Zhejiang Tmall Technology Co., will be one of the strategic investors. Alibaba owns one third of Ant and the share sale will not dilute its holding.

Ant also indicated it was moving forward with the Hong Kong leg of the offering in a separate filing.

Ant also addressed recent media reports that the Trump administration was considering placing the firm on the so-called entity list, which would restrict its ability to buy some technology from the US.

The company said items subject to US export controls constitute an "immaterial portion of the technology, components and software" used in its operations. Still, more expansion restrictions in the future could adversely restrict its ability to acquire technology that is "critical" to its business, such as US-based cloud systems.

"We cannot assure you that the current export controls or economic, trade or other sanctions regulations will not have a negative impact on our business operations or reputation, or that the related trend will not further deteriorate in the future," Ant said in its prospectus.

Analysts estimate Ant's share offering could value the company at between US$230 billion and US$250 billion, but one large early investor in Ant valued the company's digital financial ecosystem as high as US$300 billion pre-new money, according to people familiar with their thinking.

Ant swiftly won approval from the Star Market in September after applying for a dual listing in August, but has been waiting for a final green light from the China Securities Regulatory Commission (CSRC). The Chinese regulator and the Hong Kong stock exchange's listing committee approved the Hong Kong leg on Monday.

Ant is an affiliate of e-commerce giant Alibaba Group Holding, the parent of the Post.

Sharing the IPO with the mainland exchange is an important boost for Hong Kong, particularly as China further opens up its domestic financial markets to foreign investors and Beijing seeks to develop neighbouring Shenzhen as a technology and financial hub.

On Sunday, the National Development and Reform Commission (NDRC) granted Shenzhen greater ability to make reforms or enact new ventures in 40 areas to boost its profile globally, such as relaxing visa restrictions and starting its own stock futures index.

The listing also comes as questions rose in recent months over Hong Kong's standing as an international financial hub following Beijing's adoption of a controversial national security law for the city this summer.

Hong Kong is the world's second-biggest venue for fundraising globally this year, behind Nasdaq in the United States, but mainland bourses are gaining ground. The Star Market ranks third globally and Shenzhen's tech board, ChiNext, ranks sixth, according to data from Refinitiv.

Ant's share sale would be the first simultaneous dual listing on Hong Kong's main board and the 15-month-old Star Market and one of the few dual listings in China to proceed at the same time.

There are 127 companies with H-shares in Hong Kong and A-shares on a mainland bourse, but only two others opted to list simultaneously - Industrial and Commercial Bank of China in 2006 and China Citic Bank in 2007.

Ant's Alipay is one of the two biggest mobile payment apps in China, alongside Tencent Holdings' WeChat Pay.

Mobile payments have quickly become one of the most common ways to pay in the country, with businesses ranging from taxi services to meat markets now preferring them over cash.

QR codes for the digital payment services WeChat Pay (top) and Alipay at a meat stall in Beijing. Photo: Reuters alt=QR codes for the digital payment services WeChat Pay (top) and Alipay at a meat stall in Beijing. Photo: Reuters

In the second quarter, there were 30.1 billion mobile transactions in mainland China, representing a 26.9 per cent increase over the year-earlier period, according to the most recent data from the People's Bank of China. The transactions totalled 106.2 trillion yuan, a 33.6 per cent increase in the same period in 2019.

As one of the first countries to emerge from the coronavirus pandemic, China's economy is recovering at a faster pace than other parts of the world, expanding at 4.9 per cent between July and September, driven by gains in services as well as strength in its trade and industrial sectors.

It is the only major economy expected to grow this year, according to the International Monetary Fund.

Additional reporting by Daniel Ren in Shanghai

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.