Scottish Mortgage is set to benefit from the record $34.4bn portfolio holding Ant Group looks to raise in its IPO, buoying the investment trust after the Palantir stock market debut underwhelmed last month.
Alibaba offshoot Ant Group is set to break the $29.4bn IPO record set by Saudi Aramco in December 2019 with its dual listing on the Shanghai Star and Hong Kong markets. The debut would value the fintech giant at $312bn. The company priced the Shanghai listing at 68.8 yuan per share and HK$80 for the Hong Kong listing.
Reuters reports the Hong Kong listing was oversubscribed within an hour and is set to close the institutional order book a day early due to high demand.
Ant Group represented 1.9% of the Scottish Mortgage portfolio at the end of September, a stake worth £293.74m.
Last week, when Bloomberg reported Ant Group was looking to increase its valuation target to $280bn, Jefferies said the IPO would deliver a net asset value uplift of approximately 2%. “Any first day ‘pop’ could clearly deliver more gains, though,” the analyst note said.
In July, Stifel said a successful IPO would boost sentiment towards the investment trust’s unlisted holdings. That same month Scottish Mortgage shareholders had voted to increased the limit on unquoted holdings in the portfolio from 25% to 30%.
The investor frenzy for Ant Group follows an underwhelming debut for Palantir, another Scottish Mortgage holding, which went public on 30 September.
The software and data company launched at $10 a share but closed at $9.50 on its first day of trading. The stock remained at similar levels at close of play on Monday.
The company was founded by tech billionaire Peter Thiel, alongside Alex Karp and Stephen Cohen, and has courted controversy for its links with the US military.
In August, Palantir represented 0.2% of the Scottish Mortgage portfolio with the holding valued at £27.9m. At that time it had lost the investment trust 3.5% since its addition to the portfolio in 2014.
Palantir pursued a direct listing as opposed to a traditional IPO meaning the company did not issue new shares upon listing, but allowed existing shareholders to sell stocks on the first day of trading without the lock-up period of an IPO.
