By Julie Zhu
HONG KONG (Reuters) - China's Ant Group plans to raise about half of its $35 billion dual listing in Hong Kong and will not offer a cornerstone tranche as it bets on strong demand from institutional investors, sources said.
Backed by Chinese e-commerce giant Alibaba (N:BABA), Ant plans to list simultaneously in Hong Kong and on Shanghai's STAR Market next month in what could be the world's largest IPO, surpassing oil giant Saudi Aramco (SE:2222)'s $29.4 billion float last December.
The financial technology firm is seeking to raise about $35 billion after assessing early investor interest and based on a higher valuation of about $250 billion or more, Reuters has reported.
Ant aims to sell 10-15% of its enlarged share capital, splitting the float evenly between Hong Kong and Shanghai, two of the sources said, requesting anonymity as the details were not yet public.
Ant declined to comment. Bloomberg News first reported the details earlier on Wednesday.
After receiving positive initial feedback from prospective investors including some existing shareholders, Ant has decided to push ahead with the Hong Kong leg without cornerstone investors, who usually buy significant chunks of a local IPO, said three of the people.
While the cornerstone practice is common in several Asian markets and helps bolster demand for large deals, such investors generally tend to push for as low an IPO price as possible, denting issuers' ambition for higher valuations.
A high percentage of cornerstone investors would also sharply reduce post-listing trading volumes, as shares are locked up for at least six months in Hong Kong.
Ant, which won approval from the Shanghai Stock Exchange for the domestic IPO last week, plans to seek a listing hearing with the Hong Kong bourse in the coming days, said one of the people.