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Summary
- The biggest initial share sale in the history had been suspended by the Hong Stock Exchange and the Shanghai Stock Exchange
- Hong Kong Exchanges and Clearing chief has termed the decision to suspend the IPO appropriate
- Reportedly, the apparent conflicts between the Chinese government and founder Jack Ma resulted in the obstruction in the process of Ant IPO.
The initial public offering of Hangzhou-headquartered fintech company Ant Group has been hanging in the balance after the bourses have axed its launch. The stock exchanges have cited Ant Group’s failure to adhere to certain regulatory requirements and necessary disclosures with regard to its IPO following which the share sale was abandoned.
It was a missed opportunity not only for the Ant Group but also for the exchanges as experts feel that Hong Kong Exchanges and Clearing would have surged to No. 2 from its current position of No. 4 in the IPO league table of global exchanges with the listing. However, the chief executive of the bourse has termed the decision appropriate, hoping that the group will come up with a better proposal after resolving the regulatory issues.
World’s biggest IPO
Ant IPO, touted to be as the biggest initial share sale in the history, was suspended by the Hong Stock Exchange and the Shanghai Stock Exchange just a few days before the scheduled listing date. With a valuation of more than $300 billion, Ant Group was expecting to mobilise an approximate sum of nearly $37 billion via its initial share sale. But the regulator hammered the IPO plans of Ant Group.
Concerns revolving Ant IPO
Ant Group, previously known as Ant Financial, is a subsidiary of Jack Ma-controlled e-commerce-to-technology conglomerate Alibaba Group Holding Ltd. According to media reports, the apparent conflicts between the Chinese government and Ma as China’s new lending rules threw a challenge in its plans which led to its withdrawal.
Some reports also said that Chinese Premier Xi Jinping decided to pause the Ant Group IPO after Ma provoked the banking and regulatory authorities of China.
Why was Ant IPO suspended?
As the IPO process of Ant Group has been suspended, the valuation of the company may reduce drastically as the Shanghai Stock Exchange axed the IPO plans citing “significant issues” within the regulatory environment involving fintech companies. The regulators had called Jack Ma and other officials of the Ant Group for a meeting a few days before the listing of Ant Group.
Earlier in October, Ma had expressed his views on the regulatory system of China. The innovation within the regulatory system of China has been choking, Ma said, adding that the existing framework should be reformed to fuel the growth. Ma’s speech seemed to have snowballed the troubles for Ant IPO, leading to the cancellation of the share sale.
The state-controlled authorities and regulators in China started investigating the operations of Ant Group. According to some media reports, the State Council had submitted the details of Ma’s speech to the senior government leaders perceiving his disclosure as a threat to the functioning of the regulators in the country.
Also Read- Ant Group’s Race to world’s biggest IPO Abruptly Derailed, Regulator Raises Red Flag
Alibaba shares feel the heat
Within days after Ma’s speech in October, Alibaba Group shares witnessed selling pressure. From 3 November, the Hong Kong Stock Exchange-listed stock of Alibaba has been largely falling registering a slump of more than 15 per cent. According to the data available with the exchange, Alibaba Group share price has collapsed as much as 15.28 per cent to HKD 254 (16 November) from the market price of HKD 299.80 a piece as on 3 November.
Alibaba Group shares (1-month performance)
(Source: Thomson Reuters)
