China suspends Ant Group’s $37b IPO

Move to thwart world’s largest IPO leaves investors scrambling for answers


Reuters November 04, 2020

HONG KONG:

China suspended Ant Group’s $37 billion stock market listing on Tuesday, thwarting the world’s largest IPO with just days to go, in a dramatic move that left investors and bankers scrambling for answers.

The Shanghai stock exchange first announced that it had suspended Ant’s initial public offering on its STAR market, prompting Ant to also freeze the Hong Kong leg of the dual listing, which was due on Thursday.

Ant said that its listing had been suspended by the Shanghai stock exchange following a meeting that its billionaire founder Jack Ma and top executives held with Chinese financial regulators.

The Chinese financial technology giant said it may not meet listing qualifications or disclosure requirements, and also cited recent changes in the fintech regulatory environment. The Shanghai bourse described Ant’s meeting with financial regulators as a “major event”.

Regulators had summoned Ma, Ant’s Executive Chairman Eric Jing and Chief Executive Simon Hu to a meeting on Monday when they were told the company’s lucrative online lending business would face tighter government scrutiny, sources told Reuters.

Beijing has become more uncomfortable with banks heavily using micro-lenders or third-party technology platforms like Ant for underwriting consumer loans, amid fears of rising defaults and deteriorating asset quality in a pandemic-hit economy. “This has gone from the deal of the century to the shock of the century,” said Francis Lun, CEO of GEO Securities. The move reverberated across markets, with Alibaba Group Holding.

Published in The Express Tribune, November 4th, 2020.

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