The late Anwar Sadat, when president of Egypt, called 1973 his autumn of destiny. I call 2020 my autumn of destiny because four of the world’s top software/fintech will go public in IPOs in Hong Kong or New York. Each of these IPOs will be fabulously profitable for investors who are able to get allocations in these deals. The Fab Four IPOs in my autumn of destiny are Ant Financial in Hong Kong along with Snowflake, Asana and Airbnb in New York.
Despite my scepticism about chopstick capitalism, the $30bn Ant Financial IPO on the Hong Kong Stock Exchange is too yummy to ignore. This will be the world’s largest IPO on 15 October on the Hong Kong Stock Exchange, larger than even Saudi Aramco’s offering in Riyadh last year. I hear the IPO will be priced at a valuation of $230bn to $250bn, and I would not be surprised to see Ant Financial trade up to $300bn in its first five hours as a public company. The grapevine in Hong Kong tells me that this IPO will be oversubscribed by at least five to six times and allocations are white hot.
This is the world’s biggest fintech deal and the fastest-growing digital financial conglomerate, with a 30% to 35% bottom-line CAGR. The Alipay superapp is the global money-making engine, with 700 million monthly users and 80 million enterprise clients in the Middle Kingdom. This monster IPO is blessed by Beijing’s Politburo and thus enjoys Master Confucius’s mandate of heaven. So the CIO of every major pension fund and overseas Chinese family office in Asia will gladly turn cartwheels to accumulate the shares before the IPO.
Alibaba is the founding shareholder, with a 33% stake along with Temasek, General Atlantic, Warburg Pincus and Baillie Gifford. This deal was best bought in the pre-IPO market last summer at a $150bn valuation, but IPO filing has given a steroid shot to the offer price. Yet a $230bn valuation meets my risk-reward calculus for one of the world’s true growth technology IPOs. Alipay processed $17trn in payments in China alone, way beyond Visa’s $8.8trn. This puppy is a must-own for every GCC smart money investor.
Cloud data warehousing firm Snowflake finally goes public in New York under the symbol SNOW. Snow implied something quite different when I lived in New York in the 1990s – a Columbian product, detrimental to nasal membranes. This is the software industry’s hottest and biggest IPO of 2020 and will easily achieve a $40bn market cap on the NYSE. With Goldman, Morgan Stanley and twenty of Wall Street’s crème de la crème investment banks as underwriters as well as Salesforce.com and Berkshire Hathaway as anchor investors, I expect a feeding frenzy for the shares at/after the IPO.
CNBC’s Mad Money guru Jim Cramer calls Airbnb the steal of the century at its current valuation; I absolutely agree
With revenue growth above 100% in a sizzler $80bn cloud warehousing software segment, I would ideally buy Snowflake on the NYSE at $22bn to $24bn valuation where the odds of a double-bagger profit are almost certain. Mark my words, Snowflake is another Datadog/CrowdStrike scale fairy tale IPO in software. The IPO is covered at least ten times. Snowflake will be the mother of all slam-dunk tech IPO deals in this autumn of stock market destiny.
Airbnb has filed for an IPO with the SEC and will go public in late September. The global home-sharing platform was slammed 60% after the covid-19 pandemic gutted cross-border travel and tourism. The Silverlake, a top Silicon Valley venture capital firm, led a $1bn convertible debt stake with equity warrants into Airbnb in April at $18bn valuation. But that was then and this is now. Airbnb bookings have recovered to 1 million bookings last month. Operating margins were boosted by layoffs and a fall in media spend without any damage to the brand. The shares are trading in the pre-IPO market at $102 to $103. CNBC’s Mad Money guru Jim Cramer calls Airbnb the steal of the century at its current valuation; I absolutely agree, though we are only in 2020 and the century has 80 long years left to go.
I will not be surprised if Airbnb trades at $140 to $150 after its IPO. If ever there was an opportunity to invest in a global property tech colossus at a discounted valuation, this is it!
Last but not least is Facebook co-founder Dustin Moskovitz’s Asana (SANA) IPO, whose software helps workers to collaborate and communicate across projects, avoiding long email chains. The deal is led by the House of Jamie, the former J.P. Morgan and Morgan Stanley. Its subscription model boasts 1.2 million users and a 120% retention rate. Revenue growth and gross margin are 85% plus.
Watch out for the Palantir direct listing IPO: this deal could well flop. Revenue growth is mediocre in the last five years, even though it is priced at $18bn now. The exposure to government, oil and gas and financials makes it a classic pandemic victim. The chairman and CEO have been major sellers of the shares. There are many, many trapped longs itching to sell to the dumb money and mom-and-pop investors morphed into online investing geniuses. If a software company loses $500m 18 years after it was founded by the venture capital arm of Christians In Action (CIA), I doubt if its $20bn IPO valuation will hold.
