Ant Group’s Ties Come under Scrutiny over Hasty Approvals for Scuppered IPO


The woes of Jack Ma’s Ant Group continue to grow, with Chinese regulators reportedly investigating the unusual haste with which it obtained approvals for its initial public offering (IPO) that was scuppered at the last minute in November last year.

Sources said to the Wall Street Journal that the Chinese central government launched an investigation earlier this year into why regulators gave their approval to the Ant Group IPO so swiftly, with an especial focus on local officials who supported it, as well as executives from state-owned enterprises (SOE) that have ties to Jack Ma would have benefited from the listing.

These state-owned vehicles include sovereign wealth fund China Investment Corp (CIC) and and China life Insurance, who seized the opportunity to make investments in Ant.

Shanghai’s financial authorities took less than a month to complete their audit of Ant Group’s application to list on the NASDAQ-style STAR Market board following its submission on 25 August 2020 – a move which raised eyebrows given that IPO approvals often involve a dilatory process on the part of regulators.

Chinese regulators shelved Ant Group’s IPO just prior to its scheduled launch on the Hong Kong and Shanghai bourses on 5 November 2020, and have subsequently put heavy pressure both on the fintech platform and Jack Ma’s broader online empire.

Authorities have summoned Ant Group executives including Jack Ma for “regulatory discussions” on multiple occasions, requiring that the platform return to a focus on its original payments operations and convert into a financial holding company.

Reports have since emerged claiming that Chinese regulators have also demanded that Ma withdraw completely from Ant Group completely.

Jack Ma’s e-commerce giant Alibaba was also made the object of an anti-trust investigation which culminated in the issuance of a mammoth USD$2.78 billion penalty in April.

Analysts say that Ma’s ability to garner approval for the Ant IPO only for it to be cancelled at the last minute has proven to be highly embarrassing for Chinese authorities, attesting to failings when it comes to regulatory coordination.