Chinese regulators have decided to suspend the initial public offering of fintech company Ant Group on Star Market (part of the Shanghai Stock Exchange), which was supposed to take place on November 5. This was announced by the Ant Group itself on the website of the Hong Kong Exchange.
Specialized Chinese regulators felt that the company may not meet the requirements or conditions for disclosure of information for the IPO. These concerns are related to "significant issues" that have emerged in connection with the conversation of regulators with the controlling person, the chairman of the board of directors and the CEO of the company, the report said. In addition, "recent changes in the regulation of the fintech sector," the company writes.
Due to the stop of the IPO in Shanghai, the simultaneous listing on the Hong Kong Stock Exchange will also be suspended, Ant Group added. She did not specify for how long the IPO was suspended.
On Monday, the People's Bank of China, along with three other regulators, summoned Ant Group founder billionaire Jack Ma, who now controls the company, as well as chairman Eric Jing and Simon Hu, to question them about the IPO. Neither the regulators nor the company disclosed the details of the conversation. The Ant Group only specified that it would "carefully apply the views expressed at the meeting." The Financial Times drew attention to the fact that the Chinese word yuetan, which regulators used in the press release, usually indicates a "headwash" on the part of the authorities.
In October, Ma criticized China's state-owned banks and regulators and said they had a "pawnshop mentality" and they stifle innovation, while Ant Group plays an important role in lending to innovative but low-income companies and individuals, the FT recalled.
The Shanghai Stock Exchange wrote in a statement on its website that Jack Ma was called in for "test interviews" and that "other significant issues" have arisen, including changes in the "financial technology regulatory environment," the Financial Times quoted.
Ant Group planned to hold the largest-ever IPO in history simultaneously in Shanghai and Hong Kong on November 5, hoping to raise $ 34.4 billion.
Now the record is held by the world's largest oil company Saudi Aramco, which was able to raise $ 29.4 billion for an IPO. The upcoming offer of securities caused a great stir: the placement attracted applications from individual investors for at least $ 3 trillion, Bloomberg wrote.
"I have never seen an IPO suspended at this stage," a director of a Shanghai brokerage firm told the FT. He described the decision as "made in the very last minutes": "I don't think there ever was a precedent for a similar situation," he said. “In the long term, investors will change their valuation of Ant. People who gave it high marks as a technology company will have to think of it more as a financial firm and think about its growth potential, ”analyst Yu Tianjiao told Bloomberg.
Alibaba shares plummeted on the New York Stock Exchange to nearly 6%. The company owns 33% of Ant Group. A spokesperson for the company said Alibaba will provide "effective support to Ant Group" to adapt and adopt "an evolving regulatory framework."