The Shanghai Stock Exchange announced the postponement of Ant Group’s massive initial public offering, a day after Chinese regulators weighed in on a series of new fintech rules and summoned Jack. Ma went to a closed meeting with other top executives.
Rare talk between China’s top financial regulators and Ant, revealing “big changes in the fintech sector regulatory environment, ”could result in the company ineligible for listing on November 5, the stock exchange said in a statement on the evening of November 3.
It is not clear what those “changes”; are, though the exchange has asked Ant to reveal them. It is worth noting that at the end of October, Ma gave a provocative speech criticizing China’s financial regulation. The conference was attended by senior Chinese leaders and was subsequently widely debated.
Ant has halted its IPO in Hong Kong, where it plans to list at the same time, upon receiving a notice from Shanghai, the company announced in a statement.
“We sincerely apologize for any inconvenience brought to investors. We will properly handle subsequent issues following the two exchanges’ compliance regulations, ”it said.
Ant has been trying for many years to be considerate of the authorities. When rebranding from Ant Financial to Ant Technology this year, the move is seen as an attempt to erase the company’s image as a fearsome financial giant and emphasize one of its suppliers. benevolent technology. The campaign started a few years ago, causing the company to devise awkward collaborations like “techfin” (as opposed to “fintech”) and claim it doesn’t compete with traditional financial institutions, many institutions. led by the state.
Promises are more than just a show. Ant has gradually evolved into an online marketplace suitable for hundreds of millions of customers with financial products offered by traditional players. It also places heavyweights such as the National Social Security Fund and China International Capital Corporation as shareholders, which are expected to reap high returns on their investments.
But the amount of reassurance doesn’t seem enough. China’s financial authorities launched a new wave of proposals on Monday aimed at curbing the fintech sector, days before Ant expected to raise $ 34.5 billion in its initial offering. largest public in the world. The draft, though not explicitly targeting Ant, coincided with a meeting of financial regulators with Ant executives.
An Ant spokesperson told TechCrunch earlier in a statement: “Views regarding the health and stability of the financial sector have been exchanged. “Ants committed to deeply realizing meeting comments and continuing our course based on the principles: stable innovation; regulatory coverage; services for the real economy; and mutually beneficial cooperation. “
The message is clear: Ant strives to comply with Beijing’s wishes.
The company added: “We will continue to improve our capacity to provide comprehensive services and promote economic development to improve the lives of ordinary people.
This proposal is just the latest move in China’s relentless effort to bring stability to the burgeoning fintech sector. The draft regulations include a ban on intercity online lending unless approved by the authorities; the maximum online loan amount is 300,000 yuan ($ 45,000) per individual; and 1 billion yuan registered capital threshold for online microfinance institutions.
The problem is Ant’s thriving lending business, which contributes 41.9 billion yuan, or 34.7 percent, of annual revenue, according to the company’s IPO prospectus. In the year ended June, Ant worked with about 100 banks, borrowing 1.7 trillion yuan ($ 250 billion) in consumer loans and 400 billion yuan ($ 58 billion) in corporate loans. small business.
Over the years, Chinese financial regulators have dropped other policies that limit the expansion and profitability of fintech firms. For example, Ant and its rivals Alipay payment service can no longer generate lucrative returns from a customer’s reserve fund that started last year.
The article was updated on November 3, 2020 with the announcement of Ant.