Jack Ma's $30 billion Ant IPO could push tech fundraising to highest level since dot-com bubble's peak
- Ant Group's upcoming IPO reportedly aims to raise a record $30 billion and could bring first-time tech fundraising to the highest level since 1999.
- Should demand for the offering hold up, Ant's debut could bring global first-time stock sales to more than $57 billion, according to data collected by Bloomberg. The dot-com bubble's annual proceeds peaked at $62 billion.
- The debut is the latest to enjoy surging investor demand for tech stocks. With concentration in giants like Apple and Microsoft reaching historic highs, traders have turned to the IPO market for cheaper entry into the tech sector.
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Ant Group's upcoming initial public offering could bring tech IPO proceeds to the highest level since the dot-com bubble's 1999 summit.
The company — an affiliate to billionaire Jack Ma's Alibaba empire — is targeting a valuation of $225 billion and could raise roughly $30 billion in the stock sale, Bloomberg first reported last week. Should demand for Ant's IPO hold strong, the debut would push global first-time stock offerings by tech companies above $57 billion, according to data collected by Bloomberg.
The previous record was set in 1999, when investor interest in new tech stock offerings drove $62 billion worth of IPO proceeds. That year represented the peak of the dot-com era, before fledgling tech stocks tumbled at the turn of the century. By 2001, tech IPOs brought in less than $10 billion.
Ant's offering is already set to break records all on its own. Plans to raise at least $30 billion would just edge out Saudi Aramco's blockbuster $29 billion offering from the end of last year. The oil titan sold 3 billion shares at a $1.7 trillion valuation.
Ant aims to use the funds to accelerate its move into the financial industry and form an online marketplace. The company recently rolled out robo-advising and banking services to Alipay users.
Tech stocks are enjoying their best run-up in years as investors flock to the sector to ride out the coronavirus pandemic. Mega-caps including Apple, Microsoft, and Alphabet led all three major US stock indexes to erase their 2020 losses. The S&P 500 and Nasdaq composite sit at record highs after the market's best August since 1984.
The sector's rally goaded several companies to enter the market despite the weakened economic backdrop and fears of tech crowding. July alone drove $19 billion in IPO proceeds, according to Bloomberg data, the biggest one-month haul since September 2014.
The pick-up in IPO activity revives the public funding market after it slumped through the end of 2019. A highly anticipated trading debut from WeWork collapsed in a matter of weeks, and investors shunned shares of Uber, Peloton, and Lyft when the firms first began trading. After years of buying into companies' stories and ignoring annual losses, investors began to prioritize profitability.
The market's summer surge threw a wrench into that shift. Tech giants' stretched valuations defy fundamental-based strategies, yet concentration in the stocks is its highest in decades. With investors looking for underappreciated tech names, the IPO market has grown into a steady supply of opportunities.
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