IPO shock: Jack Ma’s blockbuster Ant float suspended by China

Nov 6, 2020 | Ad tech, China, Regulation

IPO shock: Jack Ma’s blockbuster Ant float suspended by China
The much- hyped listing of Ant Group, a financial technology firm founded by Alibaba’s Jack Ma, has been suspended by the Chinese government citing "major issues".

Ant runs Alipay, the main online payment system in China, which has taken over cash, cheques and credit cards as the preferred form of payment.

The listing, set to go live yesterday, was the most anticipated initial public offering in years. Ant was set to sell shares worth about $34.4bn (£26.5bn).

The listings in Shanghai and Hong Kong would have been the biggest stock market debut to date.

Ma is a 56-year-old former English teacher who co-founded China’s largest e-commerce company Alibaba with $60,000. He was poised to become Asia’s richest person with Ant Group Co.’s public offering. Instead his net worth has tumbled and both retail and institutional investors who were betting on a big first-day pop are in limbo. Even after it was suspended, Ma is still worth about $54bn.

The Shanghai stock exchange suspended Ant’s listing after Ma was called in for “supervisory interviews” by related agencies, it said in a statement Tuesday. Ant said the Hong Kong offering was frozen soon after.

“The dangers of criticising those in charge”

Analysts say the unusual and dramatic halt of the initial public offering (IPO) less than 48 hours before it was to begin trading in Shanghai and Hong Kong underlines the dominance of the Chinese Communist party over the private sector – and the danger of criticising those in charge.
Regulators cited “changes to the financial technology regulatory environment and other major issues” for the halt. While Beijing on Monday issued draft rules on micro-lending that would affect a key part of Ant’s business, analysts say the last-minute suspension is more likely to do with remarks Ma gave on 24 October at a summit in Shanghai.

In a speech, Ma directly criticised local regulators and the state-dominated banking sector. “We shouldn’t use the way to manage a train station to regulate an airport,” Ma said. “We cannot regulate the future with yesterday’s means.”

Ma’s comments went viral on Chinese social media and were seen as a direct attack on officials. Under two weeks later, Ma was summoned to meet financial regulators, and the next day the IPO was halted.

In a statement on social media, Ant said it would “overcome the challenges” and “embrace regulation”.

The Chinese state media and commentators have increased criticism of Ma, justifying the move. The People’s Daily published an article on Wednesday claiming “financial security is an important part of national security” and calling for financial institutions to “strengthen the Party’s leadership”.

The move also underlines official unease over the rise of online finance, dominated by companies such as Ant and Tencent whose digital payments platforms allow customers to make all their purchases with mobile money as well as invest and borrow.