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Ant Group, which is a branch of the Chinese Internet company Alibaba, was scheduled to go public in early November. Days before the double listing on the Hong Kong and Shanghai stock exchanges, CEO Jack Ma was called in and the listing postponed.
The company plans to raise $ 37 billion in a share issue, a new world record. The value of Ant Group was estimated at more than $ 300 billion. The listing is now postponed indefinitely. According to the Dow Jones, it was President Xi Jinping who personally stepped foot.
New business plan
The Ant Group management was at the school this weekend in front of the central bank Bank of China. They were ordered to prepare a new business plan with clear timelines on how it would be implemented. The company is asked to return to its roots as a payment intermediary.
In addition, a holding company must be established. This must be organized in agreement with an ordinary financial institution with sufficient capital and be subject to the same regulations as the more traditional banks, the insurance company and the financial institutions.
– This is the culmination of a series of regulations and establishes the direction of Ant’s business. We have not yet seen signs of a split. Ant is a major player and they need to watch out for a split, Gavekal Dragonomics analyst Zhang Xiaoxi tells Bloomberg.
– Back to the roots
According to a statement by Lieutenant Governor Pan Gongsheng, which came after this weekend’s meeting, Ant Group has lacked a strong governance mechanism, has defied public requirements and regulations, and has facilitated illegal arbitration.
The size of the group of companies has meant that there has been a lack of supervision by the authorities, according to the central bank.
“Ant must find their way back to their roots. They must understand the seriousness and realize that they must come up with a restructuring plan,” says Pan in the statement, which was also on behalf of financial supervision, banking supervision, insurance supervision and other supervisory authorities that monitor China’s economy.
The Ant Group writes in a statement that they “appreciate the guidance and support.”
Under investigation
This weekend’s latest developments come days after Internet and technology company Alibaba, which owns 33 percent of Ant Group, was investigated for possible violations of monopoly laws in China.
– You can be in full control or you can have a dynamic and innovative economy. It’s doubtful he can have both, says Fred Hu, founder of investment company Primavera Capital and also a shareholder in Ant Group for the New York Times.
Alibaba’s share price fell 8.1 percent on the Hong Kong Stock Exchange on the last trading day before Christmas. Before the opening of the stock market on Monday morning, the company issued a stock announcement in which they want to increase the buyback of shares, which can be positive. It did not happen. The share price fell more than seven percent on Monday morning.
The share price has fallen 30 percent since October. Alibaba has a market capitalization of more than $ 600 billion.
– They control everything in China
It is not just Ant and Alibaba who have been cut off by the Chinese authorities. Jack Ma, who founded the company with no technology background in the late 1990s, has realized that no one can challenge the Chinese Communist Party and leadership.
– It’s about the Communist Party. They control everything in China. It is that they do not control. If something is moving out of a separate lane, it will recover quickly. We want to see more of this, Hinrich Foundation think tank researcher Alex Capri tells Bloomberg.
– Club with old men
The recession began in October when Jack Ma approached international regulation of the financial sector and the traditional way of regulating risk. He compared following the Basel rules, as China does, to being a member of a club with elders.
“Yesterday’s methods cannot be used to regulate the future,” Ma told a fintech conference in Shanghai.
Jack Ma is said to have offered to allow the Chinese state to obtain shares of the Ant Group in exchange for allowing the listing to continue during a meeting on Nov. 2, according to the Wall Street Journal.
He is the richest man in China with a fortune of more than 50,000 million dollars. China has more dollar billionaires than the United States.
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