The record-breaking IPO of fintech giant Ant Group has been suspended after Chinese authorities summoned the company’s senior executives for “regulatory discussions.”
The Shanghai Stock Exchange (SSE) has announced the suspension of Ant’s IPO on the STAR market board that was originally scheduled for 5 November, in a move that has prompted the fintech company to also delay its concurrent Hong Kong listing.
China’s top financial regulators have also engaged in “regulatory discussions” with senior figures from Ant Group, according to information made available via the official website of the China Securities Regulatory Commission (CSRC) on 2 November.
These senior figures included Ant Group founder and controller Jack Ma, as well as chairman Eric Jing Xiandong and chief executive Simon Hu Xiaoming. Representatives from the People’s Bank of China (PBOC), China Banking and Insurance Regulatory Commission (CBIRC), CSRC and the State Administration of Foreign Exchange (SAFE) were participants in the talks.
The term “regulatory discussion” (监管约谈) is generally used in China to refer to an appointment with senior authorities for punitive purposes.
Ant Group subsequently confirmed the CSRC disclosure, telling domestic media that “relevant executives have accepted regulatory discussions with each of the key regulatory authorities.”
“Ant Group will deeply implement the opinions of the interviews, and continue to follow the 16 character guidance policy of ‘appropriate innovation, embracing regulation, servicing the real, opening and joint victory,'” said Ant.
Ant said that it was possible that the SSE had suspended its listing due to failure to satisfy listing qualifications or disclosure requirements, or because of recent changes in China’s fintech regulations, and apologised to investors for “any inconvenience caused by this development.”
“We will properly handle the follow-up matters in accordance with applicable regulations of the two stock exchanges,” said Ant in a statement.
According to sources who spoke to Reuters Chinese authorities told Ant Group executives that they would impose stricter regulation on its online finance operations – an area of keen concern following endemic problems in China’s once-flourishing P2P lending sector.
On 2 November the Chinese central bank and CBIRC jointly issued the draft version of the “Online Micro-loan Operations Provisional Administrative Measures” (网络小额贷款业务管理暂行办法（征求意见稿）), which impose far tighter restrictions on online lending operations.
The state-owned Economic Daily said in an editorial piece that the suspension of Ant’s IPO was part of efforts to protect the interests of Chinese investors, and that Ant still needed to conduct “rectifications” before pursuing its listing.
Ant Group previously came under fire for potentially “underwriting its own IPO” by making exclusive sales via the Alipay platform of investment products that allocated funds towards Ant Group shares.
The dual listing of Ant Group on the Hong Kong and Shanghai bourses was expected to raise a record-breaking USD$34.4 billion, while the most recent pricing puts the value of the fintech giant at around 2.1 trillion yuan (approx. USD$313.2 billion).
Ant Group’s Shanghai listing drew 19.05 trillion yuan (approx. USD$2.8 trillion) in bids from retail investors, according to a filing made with the SSE on 29 October.
The suspension of the IPO has caused major upset for Jack Ma’s broader operations, with his US-listed Alibaba Group – a one-third owner of Ant, seeing a drop of 9% in trading. This resulted in losses of nearly $76 billion, or nearly half the amount that Ant hoped to raise via its IPO.