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What was supposed to be the world’s largest initial public offering of shares has been stopped at the last minute. Chinese finance company Ant Group will go public on Thursday. The IPO was expected to raise an estimated $ 37 billion and increase Ant’s market value to more than $ 300 billion.
But regulators at the Shanghai Stock Exchange, where Ant planned to list, abruptly suspended the offering on Tuesday, citing “major problems” with the group that “may not meet disclosure requirements.” The Hong Kong Stock Exchange, where Ant was planning a double listing, soon continued to halt the IPO.
The indefinite suspension two days before the scheduled offering follows a regulatory reprimand from group chairman and majority owner Jack Ma on Monday, where Ant Group was asked to report on major issues related to “changes in the regulatory environment of financial technology, “the Shanghai Stock Exchange. Exchange said in a statement.
“We will be in close communication with the Shanghai Stock Exchange and other regulatory departments regarding the next steps for listing,” Ant Group said in a press release. “And it will release relevant information in a timely manner.”
Shares of Ant’s parent company Alibaba fell more than 9% after news of the suspension was announced. Ant’s joint listing in Shanghai and Hong Kong was intended to boost the prestige of China’s domestic stock exchanges and attract more public offerings from global tech companies, for which the New York Stock Exchange remains the top stock exchange.
Along with Ma, Ant CEO Eric Jing and CEO Simon Hu were “summoned” by four financial regulators, including the state bank, according to a short statement released by regulators on Monday.
Ant’s IPO cessation came after he made disparaging remarks about China’s regulatory environment and state-owned banks.
“China does not have a systemic financial risk problem. Chinese finance is basically risk-free; rather, the risk comes from the lack of a system, ”he told those gathered for a finance conference in Shanghai. “China needs policy experts today, not paper sellers.” In his comments, Ma also dismissed Chinese banks as “pawnshops” that make loans to companies “that don’t need money.” As a result, many good companies have turned into bad companies. ”
The Ant Group, spun off from Chinese tech conglomerate Alibaba and controlled by President Jack Ma, has become a formidable financial platform with assets that rival those of the world’s largest banks. Its Alipay app is China’s largest mobile payment platform, handling an estimated $ 16 trillion in online payments last year. Its vast set of user data has enabled it to act as an efficient mediator between small businesses and individual investors in need of a loan and traditional lenders. Ant Group also manages one of the largest money market funds in the world, using the unspent funds that users leave in their Alipay payment accounts.
That has led to a complex and sometimes strained relationship with Chinese regulators, who see Ant Group as a much-needed national innovator and a rival to state financial institutions.
“Regulators must reaffirm the primacy of regulators and the need to preserve stability,” said Duncan Clark, chairman of consultancy BDA China on the suspension of Ant’s IPO. “It’s the government’s standard muscle flex.”
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