The shock move comes after China’s regulators warned Jack Ma’s company. (FILE)
China halted the sale of Ant Group Co.’s $ 35 billion shares in Shanghai and Hong Kong, derailing the world’s largest initial public offering.
The Shanghai Stock Exchange will suspend listing after Ma was called in for “supervisory interviews” by related agencies, it said in a statement on Tuesday. There was a “significant change” in the regulatory environment and “such significant problems could lead to your company no longer complying with the listing or disclosure requirements,” the statement said.
The Hong Kong leg will also be suspended, Ant said in a document shortly after Shanghai’s announcement. The fintech company’s debut was expected on Thursday. Alibaba Group Holding Ltd., which owns about a third of a stake in Ant, fell 8% in pre-market operations in the United States. Hong Kong Hang Seng Index futures lost as much as 1.2%.
The shock move comes after China’s regulators warned that Jack Ma’s company faces increased scrutiny and will be subject to the same capital and leverage restrictions as banks. Ma, the billionaire co-founder of Ant, was called to a rare joint meeting on Monday with the country’s central bank and three other top financial regulators.
A representative for Ant could not immediately respond to a request for comment.
“It’s a pretty bad aspect to have a Chinese company doing the world’s largest IPO, attracting billions of global investors and shutting down on the eve,” said Yu Tianjiao, an analyst at Hong Kong’s Sanford C. Bernstein. “In the long term, investors will reassess the price of Ant, people who gave it high ratings as a technology company will have to start thinking of it more as a financial services company and question the growth potential.”
Ant’s decision to go public on the Star board, a market launched in Shanghai last year, was seen as a huge win for the mainland stock exchange. The IPO had attracted at least $ 3 trillion of requests from individual investors for its double listing in Hong Kong and Shanghai. In its preliminary price consultation on its Shanghai IPO, institutional investors subscribed for more than 76 billion shares, more than 284 times the initial offering tranche.
The fintech company’s IPO would have given it a market value of roughly $ 315 billion according to filings, larger than JPMorgan Chase & Co. and four times larger than Goldman Sachs Group Inc.
“It’s definitely amazing,” said Mike Bailey, research director at FBB Capital Partners. “If something strange happens on the macro side of China’s financial markets or in the company, it would be worrisome. That would be like, for example, if we had a problem with Amazon. I would see it as a significant problem for them.” This could be something that feeds back into global markets. “
Ant has faced scrutiny from Chinese state media in recent days after Ma criticized local and global regulators for stifling innovation and not paying enough attention to development and opportunities for young people. At a Shanghai conference late last month, he compared the Basel Accords, which set capital requirements for banks, to a club for seniors.
(Except for the headline, this story has not been edited by NDTV staff and is posted from a syndicated feed.)
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