Anthropic IPO Said to Turn Away China, Hong Kong Orders

What happened

Several US banks working on the offering have refused orders from buyers in mainland China and Hong Kong, or told clients an allocation is highly unlikely, according to the report. Verbal communications from the New York-based syndicate team handling Anthropic allocations indicated that ITAR restrictions bar investors from the China region from taking part. Anthropic did not respond to a request for comment.

The approach mirrors Elon Musk’s $86.2 billion SpaceX IPO earlier this year: international distribution coordinator Citigroup told the syndicate that Chinese and Hong Kong buyers were barred under ITAR, though investors in both places could buy the stock after listing. Anthropic’s products are not available in mainland China and Hong Kong.

Some Chinese and Hong Kong investors are attempting to bid through British Virgin Islands trusts, special purpose vehicles and swaps. A family office tied to a Chinese technology founder has submitted an order using a trust registered in the British Virgin Islands, though it remains uncertain whether the bid will succeed; final allocation decisions rest with Anthropic.

The filing and the terms

Anthropic’s amended filing dated Nov 10 lists selling restrictions for 25 markets, including Taiwan, Singapore and South Korea. Hong Kong is not among them, and the words “Hong Kong” do not appear elsewhere in the filing. The filing says the company’s models, platform and applications are subject to US export controls, and some products may fall under Commerce Department export rules or ITAR.

Terms are unchanged: pricing on Nov 18, trading on Nasdaq from Nov 19 under the ticker ANT; Goldman Sachs and Morgan Stanley lead, with 20 other banks participating. The IPO plus a $26 billion private placement total up to about $90.4 billion, at a target valuation of about $1.4 trillion, with orders running about six times the shares available.

Key facts

1. Restriction: Institutional investors in mainland China and Hong Kong have been excluded from placing orders in Anthropic’s IPO, Bloomberg reported on Nov 13, citing people familiar with the matter
2. Basis: The limits are partly due to the US International Traffic in Arms Regulations (ITAR), raised in verbal communications from the syndicate team
3. Precedent: SpaceX’s $86.2 billion IPO this year likewise barred mainland China and Hong Kong orders under ITAR, with Citigroup coordinating international distribution
4. Workarounds: Some investors are trying British Virgin Islands trusts, special purpose vehicles and swaps; a family office tied to a Chinese tech founder has submitted an order
5. Filing: The Nov 10 amended filing lists selling restrictions for 25 markets; Hong Kong is not among them; company products are subject to US export controls
6. Offering: Pricing Nov 18, trading Nov 19, ticker ANT; Goldman Sachs and Morgan Stanley lead, with 20 other banks; orders about six times the shares available