(Bloomberg) -- Jack Ma, the former English teacher who co-founded Alibaba Group Holding Ltd. with $60,000, is poised to become the world’s 11th richest person after Ant Group Co. priced shares for a record initial public offering.Ma’s 8.8% stake is worth $27.4 billion based on the stock pricing in Hong Kong and Shanghai. That will take the 56-year-old’s fortune to $71.1 billion on the Bloomberg Billionaires Index, exceeding that of Oracle Corp.’s Larry Ellison, L’Oreal SA heiress Francoise Bettencourt Meyers and individual members of the Waltons, whose family owns Walmart Inc.Ant’s mammoth listing is poised to boost the fortunes of a group of early investors and employees. The company has granted staff share-based awards since 2014 and at least 18 other people have become billionaires from the IPO. Lucy Peng, a director at the payments giant through August, is the biggest individual Ant owner after Ma, and has a $5.2 billion stake. Chairman Eric Jing’s holding is worth $3.1 billion.Ant is set to raise almost $35 billion, beating Saudi Aramco’s $29 billion sale last year. The Shanghai stock priced at 68.8 yuan ($10.27) apiece and its Hong Kong shares at HK$80 ($10.32) each. The company could raise another $5.2 billion if it exercises its green shoe options, taking its market value to about $320 billion. That would be more than JPMorgan Chase & Co. and four times bigger than Goldman Sachs Group Inc.The big winners of the listing own their stakes through two limited partnerships registered in Hangzhou that together hold about 40% of Ant. Alibaba, in turn, has a third of the fintech firm. Hong Kong’s Li Ka-shing, the family behind a French supermarket giant, the son of a Taiwanese real estate billionaire and Chinese retail tycoon Shen Guojun are among the other owners who have invested in the company over the year.Ant began when Alibaba launched the Alipay payments app in 2004 as an escrow service for buyers and sellers on Ma’s e-commerce website. In 2013, they were given the ability to save money and earn interest on the balances stored on their accounts. The firm then started offering credit to small businesses, branching out from its consumer-finance focus, and eventually expanded to services such as block chain, cloud computing and artificial intelligence.Since co-founding Alibaba with Ma, Peng served in different roles. She set up Alibaba’s human-resources department and, after helping create Ant, was its chief executive officer until Jing took over in 2016. Two years later, he succeeded her as executive chairman of the fintech company.Both Peng and Jing are members of the Alibaba Partnership, a 36-person group with the power to determine the annual cash bonuses for all members of management.(Updates Jack Ma’s wealth in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Jack Ma’s Ant Group Co. is set to raise about $34.5 billion through initial public offerings in Shanghai and Hong Kong, a blockbuster listing that will rank as the biggest IPO ever and make it one of the most valuable finance firms on the planet.Demand has been so high the company plans to stop taking investor orders for the Hong Kong leg a day earlier than scheduled as the share sale has already been heavily subscribed, according to people familiar with the matter.The fintech giant will have a market value of about $315 billion based on filings Monday, bigger than JPMorgan Chase & Co. and four times larger than Goldman Sachs Group Inc. The sale vaults Ma’s fortune to $71.6 billion, topping the Walmart Inc. heirs.The IPO is attracting interest from some of the world’s biggest money managers, and sparking a frenzy among individual investors in China clamoring for a piece of the sale. In the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, more than 284 times the initial offline offering tranche, according to Ant’s Shanghai offering announcement.“This was the first time such a big listing, the largest in human history, was priced outside New York City,” billionaire founder Ma told the Bund Summit in Shanghai Saturday. “We wouldn’t have dared to think about it five years, or even three years ago.”The strong demand puts the much-anticipated IPO on track to surpass Saudi Aramco’s $29 billion sale last year. Ant priced its Shanghai stock at 68.8 yuan ($10.27) apiece and its Hong Kong shares at HK$80 ($10.32) each. The company may raise another $5.17 billion if it exercises the option to sell additional shares to meet demand, known as the greenshoe.This is “a homecoming for capital markets in Shanghai and Hong Kong,” said John Ho, founder of Janchor Partners. Ho, who invested $400 million in Ant two years ago, added that he’s trying to secure a bigger allocation of the Hong Kong shares and that being able to invest in Ant “is priceless.”T. Rowe Price Group Inc., UBS Asset Management and FMR LLC, the parent of Fidelity Investments, are among the money managers angling for a piece of the deal, a person familiar with the matter has said. Hong Kong stockbrokers are so confident Ant IPO will go smoothly that they’re offering to let mom-and-pop investors buy the stock with as much as 20 times leverage.Ant began when Alibaba Group Holding Ltd. launched the Alipay payments app in 2004 as an escrow service for buyers and sellers on Ma’s e-commerce website. In 2013, they were given the ability to save money and earn interest on the balances stored on their accounts. The firm then started offering credit to small businesses, branching out from its consumer-finance focus, and eventually expanded to services such as block chain, cloud computing and artificial intelligence.“The investment thesis of Ant is a systemic valuation transfer from mainstream Chinese financial institutions such as banks to a platform that’s data-driven, with a huge network effect, and enjoying almost zero marginal costs of cross-selling,” said Nick Xiao, CEO of Hywin International, the Hong Kong arm of Hywin Wealth that’s helping rich individuals buy shares of Ant. “Every bank and securities house and fund manager will have to plug into it, while every consumer, corporate or individual, cannot live without it.”The fintech giant is charging ahead with its landmark offering just days ahead of the U.S. election. The Hong Kong trading debut will be on Nov. 5., only two days after the U.S. vote, an event that could spark market volatility if the vote is disputed or counting delayed.Ant has picked China International Capital Corp. and CSC Financial Co. to lead its Shanghai leg of the IPO. CICC, Citigroup Inc., JPMorgan. and Morgan Stanley are heading the Hong Kong offering. Existing Ant shareholders won’t be able to sell shares for six months, according to the filings.The company will issue no more than 1.67 billion shares in China, equivalent to 5.5% of the total outstanding before the greenshoe, according to its prospectus on the Shanghai stock exchange. It will issue the same amount for the Hong Kong offering, or about 3.3 billion shares in total.Alibaba Group, which was co-founded by Ma and currently owns about a third of Ant, has agreed to subscribe for 730 million of the Shanghai shares, which will be listed in Shanghai under the ticker “688688,” according to the prospectus. Alibaba will hold about 32% of Ant shares after the IPO.(Adds details on order book from second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- U.S. authorities have lately been taking steps against Wall Street misbehavior, perhaps seeking to respond to criticism that they have been slow to prosecute white-collar crime. Their settlements with two of the country’s largest financial institutions bear many similarities to deals struck in recent years — arrangements that haven’t done enough to deter bad actors. But there are also some encouraging differences.Companies can’t commit crimes unless people do, so you’d expect holding individuals rather than entire enterprises responsible to be the norm. Lately, that hasn’t been true. Although common after earlier debacles such as the savings-and-loan bust of the 1980s and the accounting scandals of the early 2000s, charges or serious sanctions against individuals have more recently been rare. Rather than doing the hard work of building cases against the people who actually commit the crimes, the Justice Department has preferred to hit up companies for headline-generating monetary settlements.In these new cases, officials have imposed heavy fines, as before. Last week, Goldman Sachs Group. Inc. agreed to pay $2.3 billion to settle charges of enabling embezzlement at Malaysian development fund 1MDB — the largest penalty in the history of the 1977 U.S. Foreign Corrupt Practices Act. And last month, JPMorgan Chase & Co. was fined $920 million — the largest ever for the Commodity Futures Trading Commission, and the harshest penalty so far in the Justice Department’s campaign to crack down on a form of market manipulation known as “spoofing.” These are serious penalties, of course, but will they work as intended? After all, they are built on the assumption that extracting money from shareholders, who were ignorant of the crimes and in no position to stop them, will improve corporate behavior. Experience suggests otherwise. Over the past couple decades, the five largest U.S. banks — including Goldman and JPMorgan — have paid more than $170 billion to settle cases involving money laundering, mortgage-backed securities fraud, bribery and more. Though there is often a promise to strengthen controls and report further wrongdoing, transgressions persist. In the 1MDB case, Goldman conceded that its officers participated in a bribery scheme that involved issuing $6.5 billion in debt and diverting much of the proceeds to foreign officials and people connected to them. (Some of the money ultimately found its way into a yacht, fine art and the Hollywood movie “The Wolf of Wall Street.”) Dozens of senior Goldman officials reviewed the debt deals, which were approved despite significant red flags, such as a lack of clarity on what the cash was being used for.JPMorgan, for its part, admitted that even as it pleaded guilty to currency manipulation in 2015, its traders in other markets were bilking counterparties out of more than $300 million, in tens of thousands of separate incidents over many years extending well into 2016. The misconduct occurred not only in precious metals, but also in U.S. Treasury securities, undermining a market that is crucial to government finance and that serves as the foundation for the prices of everything from mortgages to stocks.The good news is that the settlements aren’t the whole story. This time, there’s a modicum of something that has long been missing in white-collar cases: individual responsibility. In Goldman’s case, Justice has criminally charged the two bankers directly involved in the deals (one has pleaded guilty, the other denies wrongdoing), and the Federal Reserve has barred their boss from the banking industry. What’s more, in an unusual and laudable move, Goldman will cut or claw back some $174 million in compensation from its most senior leaders, signaling perhaps a new and important approach to accountability.In the JPMorgan case, as Bloomberg News has reported in detail, investigators have worked their way up the chain of command, making cooperation deals in order to focus on managers who encouraged unlawful behavior. Novel legal strategies — such as applying the Racketeer Influenced and Corrupt Organizations Act — may further allow them to impose penalties on individuals, such as forfeiture of any ill-gotten gains.Greater emphasis on individual responsibility is overdue. To that end, Congress and regulators should provide stronger protections for whistleblowers, require prosecutors to charge individuals when bringing cases against companies, strengthen judicial review of deferred prosecution agreements, and create a dedicated corporate crime unit at the Justice Department. With the right policies in place, the Goldman and JPMorgan cases could prove to be a step in a more just direction.Editorials are written by the Bloomberg Opinion editorial board. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.