Big fees and bragging rights lost: Ant Group bankers hit by shock IPO suspension

By Reuters

  • 05 Nov 2020
Credit: Reuters

The eleventh-hour halt to Ant Group's record $37 billion listing has not only hurt the firm, but also lead bank China International Capital Corporation (CICC), which likely loses out on a hefty payday and a jump in global investment banking rankings.

CICC had the coveted position of being the only bank to work on both legs of the Hong Kong and Shanghai listing, which would have made it eligible to earn more in fees than other banks on the deal.

League tables published on Monday by Dealogic distributing credit for the Ant deal saw CICC shoot to the second spot globally for new listings from fifth, placing it behind Credit Suisse and ahead of Wall Street majors.

That would have been CICC's highest position on the global tables since it topped the rankings in 2009, the Dealogic data showed.

CICC, which saw its shares slide 6.5% on Wednesday, did not immediately respond to a request for comment.

The Shanghai stock exchange decided Tuesday to suspend the deal just days before its debut after regulators stepped in, prompting Ant to halt the Hong Kong portion of the listing as well.

Equity capital market bankers, who have had a good year including a record third-quarter, were expecting Ant to close out 2020 with a bang. But with the listing suspended, Ant's army of investment bankers, including those from Wall Street firms, will have to forgo fees as well as bragging rights for having worked on the world's largest IPO.

"If the deal gets indefinitely delayed, the lead banks will likely only get some of their legal costs back. It all depends on what was agreed at the outset," said capital markets consultant and former investment banker Philippe Espinasse.

The 24-strong banking syndicate which underwrote the Hong Kong leg of the deal were due to be paid up to $198 million, the company's prospectus showed.

"There are no proceeds to be paid from," said one Hong Kong banker not working on the IPO. "You do it for the pleasure of working for the king," he said in reference to Ant founder and billionaire Jack Ma.

The banker was not authorised to speak to media and declined to be identified.

The missed opportunity represents a double whammy for CICC and the other main underwriters on the deal as they had been discouraged from working on assignments for Ant competitors during the process.