Ant Group’s $ 37 billion listing was suspended in both Shanghai and Hong Kong in a dramatic move just two days ahead of what was supposed to be the debut on the world’s largest stock exchange.
The Shanghai Stock Exchange first announced that it had suspended Ant’s initial public offering on its STAR market, prompting Ant to also freeze the Hong Kong leg of double listing. Alibaba shares tumble 7% after the suspension of Ant Group’s IPO.
Ant said its listing had been suspended by Shanghai following a recent interview that regulators held with founder Jack Ma and top executives. He said that it may not meet listing ratings or disclosure requirements, and also cited recent changes in fintech’s regulatory environment.
Shanghai described Ant’s meeting with Chinese financial regulators as a “major event.”
Alibaba said it will support Ant Group to adapt and adopt the evolving regulatory framework.
Ant was scheduled to go public in Hong Kong and Shanghai on Thursday after raising about $ 37 billion, including the domestic branch green option, in a record public share sale.
“This is a curve ball that has been thrown at us … I don’t know what to say,” said a banker who works at the IPO.
Regulators had summoned Ma, Ant CEO Eric Jing, and CEO Simon Hu to a meeting Monday when they were told the company’s lucrative online loan business faced stricter government scrutiny. sources told Reuters.
The meeting came when the Chinese authorities published a new draft of rules for online microloans.
In late October, Ma had called financial regulation outdated and unsuitable for companies trying to use technology to drive financial innovation.
But Beijing has become more uncomfortable with banks largely using microlenders or third-party tech platforms like Ant to underwrite consumer loans, amid fears of rising defaults and deteriorating asset quality in a economy hit by a pandemic.
“Either this is something that requires short-term clarification via an ad and / or supplemental prospectus, and investors could be asked to reconfirm their orders, usually not many do, when something like this happens. Or the Deal will simply be closed and delayed for a period of time, pending resolution of the issues.
“This is a significant blow or development for both the company and other potential fintech issuers in Hong Kong and mainland China,” said Philippe Espinasse, a capital markets consultant and former investment banker.
.
