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This article is written by Vibhor Goel, pursuing Diploma in Business Laws for In-House Counsels from LawSikho.


Ant Group IPO was set to be the world’s largest IPO, had it been a successful transaction. It involved a syndicate of the world’s finest investment banks and stock exchanges. Such transactions not only gain traction by the individuals in the concerned field, but the public at large and have the power to alter the financial and political dynamics of any country. The present article explores the heart of the Ant Group IPO, it talks about the parties involved, goes through the concepts involved and talks about the role investment banks play in such transactions.

Who are the parties involved?

Goldman Sachs

The Goldman Sachs Group, Inc., commonly known as “Goldman Sachs” is one of the leading global financial institutions. It was founded in 1869 and its headquarter is in New York. It maintains its offices in almost all of the major financial centres across the globe and renders wide-ranging services for investment banking, consumer banking, securities and investment management. Goldman Sachs has a diversified clientele in over 30 countries for whom it has been able to facilitate economic growth. It is one of the most well-known and proficient investment banks in the world that has seen tremendous growth over the years. (See Here)


Alibaba Group Holding Limited, commonly known as “Alibaba” is a Chinese multinational company that specializes in technology especially relating to e-commerce and retail. It was founded in the year 1999 by 18 people led by a former English teacher Jack Ma. It was their belief that the internet would play a crucial role in consumer goods and for the growth of small merchants and domestic economies. Since then, it has developed an ecosystem of companies including Taobao, Tmall, Freshippo, Lazada, Youku, Alimama etc. The most well-known company among the general public is AliExpress which is an e-commerce website.

Ant Group 

Ant Group is an affiliate company of the Alibaba Group. It controlled the largest digital payment platform in China known as Alipay. Alipay is a third-party app that was founded by the Alibaba Group in 2004 and quickly overtook PayPal in 2013. It has over 870 million users internationally as it continues to grow. The growth Alipay has seen is an amazing achievement by the Alibaba Group, so much so that the Chinese government has taken an interest in the company. 

What is an IPO?


The full form of IPO is an “initial public offering”. IPOs are basically public offering of shares or securities of a company to the general public and is generally done after the company has been listed on a stock exchange. The stocks are sold to both institutional and non-institutional or retail investors (individuals), and this is the process by which a company is turned into a public company. Informally it is also referred to as “Going Public”. This is a complex process that includes a lot of benefits like raising capital but also includes a lot of risks and opens the company to new types of regulations set by the governments and organizations like SEBI. These complexities are handled by the investment banks like Goldman Sachs and after the completion, shares of the company can be freely traded in the open market. Some of the biggest IPOs seen worldwide include Saudi Aramco in 2019 at $29.4 Billion, The Alibaba Group in 2014 at $25 Billion, SoftBank Group in 2018 at $23.5 Billion and the Agricultural Bank of China in 2010 at $22.1 Billion.

Process of an IPO in India 

To understand what role an investment bank like Goldman Sachs plays in an IPO transaction it is important to understand the process of how an IPO transaction takes place. In India, the companies have to follow the process set by the stock exchanges and the regulatory bodies in order to be listed and make their shares eligible to be traded publicly. The process is highlighted by the steps below:

  1. Step 1: The first step itself is to hire an investment bank in order to have experts that can make the transaction profitable and minimize the risk. These banks act as an intermediary between the company and the investors. They perform various services, go through a large amount of financial data. The primary service is that of “Underwriting” for which they are also known as “Underwriters”, which will be discussed further in this article. 
  2. Step 2: The second step is that of registration and preparation of a “Red Herring Prospectus or RHP”, as mandated by the companies act and SEBI regulations. An RHP is a preliminary prospectus that is filled with the SEC and the registrar of companies which highlights details like risks involved, financials, type of business and industry, how the money raised will be used etc. This ensures a certain level of security, accountability and transparency. 
  3. Step 3: The details disclosed by the company are then verified by SEBI, post which the company may announce a date for its IPO. Further, an application is made to the stock exchange for floating (making the shares available for the public to trade) its first issue.
  4. Step 4: After all this, the company invests most of its energy in advertising its IPO and generating as much publicity as possible to attract investors. This may seem a trivial step but goes a long way in making the IPO successful and profitable. The companies may adopt various strategies like question-answer sessions to remove doubts, multimedia presence to create awareness, virtual conferences etc. 
  5. Step 5: The pricing of the IPO is done which can be through fixed price IPO or by bookbinding officer. 
  6. Step 6: The final step is the allotment of shares to the investors which is usually done within 10 working days of the conclusion of bidding. 

Role of investment banks in IPO transactions

Investment banks or merchant banks are those banks that do not accept deposits from the general public. They are essential in IPO transactions and help businesses and governments in investment transactions especially by creating, underwriting and distributing new securities. Investment banks are also the ones that make or help make the initial prospectus of the IPO and set the initial stock price, according to the wants of the company but also at a level that will attract a good number of investors. This price determination is a tricky matter as the perfect balance has to be achieved. 

One of the most important and primary roles of investment banks is underwriting new stock issues. IPO underwriters are financial experts who work closely with the company and help determine the initial offering price. The bank purchases the shares from the company and then sells it to the investors, it ensures that a certain number of stocks are sold and also protects the company in case of any unforeseen event that may disrupt the IPO. Most of the well-recognized banks have a developed distribution network and a better network helps the transaction to proceed more smoothly and profitably. While the banks protect the interests of their client company, they also ensure a fair price to the investors. 

Large companies, conducting high-value IPO transactions, like the Ant Group, usually take assistance from more than 1 investment bank. This way, the risk is diversified for both the company and the bank while also requiring a low financial commitment to the IPO. The IPO of Ant involves a syndicate of various famous investment banks like Goldman Sachs, JP Morgan, Morgan Stanley, Capital Corp and Citigroup. 

The Ant Group IPO

Goldman Sachs was hired as the joint lead manager for the Hong Kong part of the IPO. Goldman Sachs and other investment banks were to play such important functions as stated above amongst other services, however, the Ant Group IPO never took place. Ant Group was about to raise an estimate of $34.5 Billion from its IPO which would’ve been the world’s largest IPO and valued the company at $313 Billion. The documents of the IPO were filed in August 2020 and in November 2020 it was announced that the IPO is going to be suspended. The company cited “Major Issues” as the reason for suspension. 

The Wall Street Journal soon published that Chinese President Xi Jinping personally made the decision to halt the Ant Group IPO. The article mentioned that the result was not something spontaneous but a culmination of years of tensions between the president and Jack Ma. Tensions were majorly due to the rapidly growing success and influence of the entrepreneur, while also the increased control he was having over the digital payments market in the country, (as mentioned earlier, the Ant Group controlled the largest digital payments network in the country known as “Alipay”).

Post the suspension of the IPO, the company was hit by a storm of regulatory guidelines by the government. Soon it was reported that the Ant Group would be converted into a financial holding company that is overseen by the state-controlled central bank in China (People’s Bank of China). The company was asked to rectify its business and comply with the regulatory guidelines given by the central bank and the government. Accordingly, the Ant Group announced in January 2021 that it was going to comply with the wishes of the Chinese central bank.


The Ant Group IPO had the potential of becoming the world’s largest IPO but failed to do so. Even so, the role of investment banks like Goldman Sachs proved crucial in the process and is an excellent example of how investment banks can help businesses globally. While the financial parameters and complexities of such transactions are huge, investment banks also have to be prepared for such unforeseen challenges. Political influence and government control come into play in almost every major transaction as such big companies hold influence over a large part of the population and the government must do everything in its power to ensure good governance and protection of public interest. While the outcome may not always be as desired by the company or investors, the experience and expertise of large-scale investment banks such as Goldman Sachs ensure that the damage done is minimal.


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