This undated photo shows an Ant Group mascot in Hangzhou, capital of China’s Zhejiang province. (LONG WEI / FOR CHINA DAILY)

HONG KONG - Ant Group’s planned sale of up to US$30 billion worth of shares is set to revive fortunes for Hong Kong Exchanges and Clearing Ltd which fell to fifth rank as a destination for initial public offerings (IPOs) in the first half of 2020.

The Chinese mainland’s dominant mobile payments firm and fintech arm of Alibaba Group Holding Ltd on Tuesday filed for a dual-listing in the Hong Kong Special Administrative Region and on Shanghai’s STAR Market in what could be the world’s largest IPO

The Chinese mainland’s dominant mobile payments firm and fintech arm of Alibaba Group Holding Ltd on Tuesday filed for a dual-listing in the Hong Kong Special Administrative Region and on Shanghai’s STAR Market in what could be the world’s largest IPO.

ALSO READ: Jack Ma's Ant Group files for IPO in HKSAR, Shanghai

Ant Group warned that rising US-China trade tensions threaten its business as it gears up for the IPO that could give it a valuation as big as Bank of America Corp.

The mainland e-commerce and fintech giant highlighted the geopolitical tensions in its filings for a dual IPO in Hong Kong and Shanghai late Tuesday, citing possible US export controls and trade sanctions as key expansion risks.

Unlike mainland tech firm such as Ma’s Alibaba Group Holding Ltd, Ant decided against listing in the US amid increased scrutiny by the Trump administration of Chinese companies, and warnings to US endowment funds to offload their stakes in US-listed Chinese businesses.

ALSO READ: Hong Kong looks to speed up IPO process to reduce risks

Hong Kong was the world’s top listing venue in 2019, due to Alibaba’s US$12.9 billion secondary listing there, but ranked third for IPOs, Refinitiv data showed. It was top for IPOs in 2018.

For IPOs in the first half 2020, Hong Kong fell to fifth behind the Nasdaq, New York Stock Exchange, the year-old STAR Market and the broader Shanghai Stock Exchange.

Few large-sized IPOs are in the pipeline for rest of the year at Hong Kong’s rival bourses.

TECH ADVANCE

Ant has not disclosed how much it expects to raise in each of its Hong Kong and Shanghai offerings.

“Hong Kong provides access to international institutional investors and convertible currency, whereas Shanghai may allow broad participation by domestic investors,” said Drew Bernstein, co-chairman of advisory Marcum Bernstein & Pinchuk.

READ MORE: Ant Group 'plans consumer finance firm' in growth push

Technology companies account for 25.1 percent of Hong Kong’s benchmark Hang Seng Index by value, Hong Kong Stock Exchange (HKEX) data showed, from just 8.6 percent in 2015.

“The Hong Kong market is changing and internet giants are increasingly replacing property companies and financial institutions,” said capital markets consultant Philippe Espinasse.

The preliminary IPO filing shed some light on Ant’s reach. Alipay’s total transaction volume reached 118 trillion yuan in the 12 months ended in June. The app had more than 1 billion users and 711 million monthly active users. More than 80 million merchants used Alipay to conduct business and Ant partnered with more than 2,000 financial institutions.

The company is also seeing a shift in its revenue structure, generating a greater contribution from technology services fees. The contribution from digital payments and merchants services fell 7.1 percentage points to 35.9 percent in the first half from the end of last year.

READ MORE: HK's global IPO crown will be difficult to sustain in 2020

Its digital finance technology platform, which includes services credit, investment and insurance tech operating under the brands including Huabei, Jiebei and Yu’E Bao, accounted for 63.4 percent of revenue in the first half, up from 56.2 percent at the end of 2019.

HKEX declined to comment on Ant’s listing. When Ant announced its plans on July 20, HKEX Chief Executive Charles Li said the deal would affirm Hong Kong “as the world’s leading international IPO market”.