This will be the largest ever public offering, the most important international launch by China’s Ant Group, to strengthen the financial technology company and its reputation. the Shanghai and Hong Kong stock exchanges, where it is ready for listing.
Until, the Chinese government blocked Ant’s initial public offering of shares.
Officially, Ant Group’s $ 35 billion IPO is on hold until it can comply with Chinese government regulations that go into effect Nov. 1, including remediation. lack of funds.
Unofficially, analysts say the delay is a serious move by Chinese President Xi Jinping over Ant’s founder Jack Ma, the country’s second richest man. The suspension comes days after Ma gave a speech that contradicted the Chinese Communist Party̵7;s treatment of the economy.
As the decline continues, investors are paying attention to what Ant’s fate means for international businesses amid China’s dictatorship. Here’s all you need to know.
Psst, this is a shame, but what exactly is Ant Group?
Ant is the financial arm of e-commerce giant Alibaba and started operating in 2004 as a payment processing website. Ant’s Alipay app now has more than 730 million monthly users in China, who use it to pay bills, shop and send money to friends. Ant services also include insurance, lending, and property management.
So is it a financial services company?
That’s part of the debate. Ma has argued that Ant is more like a “techfin” than a “fintech”. The company recently changed its name from Ant Financial to Ant Group.
Techfin, fintech – come back?
Ant claims it is a technology company that works with financial institutions, meaning it will enjoy less regulation and more freedom under Chinese law.
But Chinese financial regulators say Ant’s business model of connecting lenders and borrowers is completely under their scrutiny. And that’s where Ant’s IPO train begins to get off the rails.
So what happened?
Ant initially went public on November 5 and attracted a lot of investors in the process – it had about $ 3 trillion in orders for dual listing in Hong Kong and Shanghai. Ant’s IPO is expected to eclipse a $ 29 billion IPO for Saudi oil giant Aramco, by far the largest public offering in the world. But then Ma, a 56-year-old former English teacher, was called into the principal’s office.
In his speech at the Bund conference in Shanghai on October 24, Ma emphasized that the world “focuses only on risk control, not development, and they rarely consider opportunities for young people.” age and developing countries ”.
Ma expressed that the financial managers seem to be a kind of senior club who wants to play it too safe, which is not good for “young” economies like China.
It doesn’t sound too bad.
Ma’s comments come just hours after the conference’s keynote speaker, Chinese Vice President Wang Qishan, made a more cautious note, saying that China would “stay out of the way. of over-speculation, self-consolidation cycles of financial bubbles and Ponzi schemes. ”
Ma was called to Beijing to meet with government officials on Nov. 2. The next day, Ant’s list was withdrawn from the Shanghai Stock Exchange.
Oh! What is the official reason?
Chinese regulators have called on company management to “interview supervisors by relevant departments,” the Shanghai Stock Exchange said in a statement announcing the suspension of Ant’s IPO. and “changes in the financial technology regulatory environment and other major issues”.
How did the whole incident cost Ma?
Ma reported that Ma’s stake in Alibaba Group Holding, which owns a small portion of Ant, fell about $ 3 billion after the IPO was delayed. The company is currently in the process of making instructions from that Beijing meeting to be able to go back there.
However, the Insurance and Banking Regulatory Commission of China may also impose new rules on Ant’s credit platforms, Bloomberg reported, citing sources familiar with the matter, which this probably meant Ma’s headache was far from over.
Okay, now Ant continues to march. But is there a lasting loss?
Maybe. The Chinese government seems to be sending out a clear signal that it is not afraid to step in and cancel the party when a private company does not play by its rules. And that may cause investors to want to participate in the world’s second-largest economy – but not to join the Communist Party line.