Regulators v Ant Group
监管者 V 蚂蚁集团
The world's biggest IPO is now the world's biggest suspended IPO
Jack Ma was in a triumphant mood shortly after Ant Group, his Chinese fintech firm, priced its initial public offering—set to be the world's biggest ever, with almost $40bn worth of shares sold. Speaking at a summit in Shanghai on October 24th, he chided regulators for being too focused on preventing financial risks. Red tape, he said, only held up innovation. Ten days later his words came back to haunt him. Less than 48 hours before its stock was to begin trading in Hong Kong and Shanghai, Ant was forced by Chinese regulators to halt the flotation.
The group said in a regulatory notice to the Hong Kong exchange that the IPO, scheduled for November 5th, had been suspended because the company "may not meet listing qualifications or disclosure requirements", after the regulator conducted an interview with Mr Ma and other executives. The filings also mentioned "recent changes in the fintech regulatory environment", hinting that newly published rules may have got in the way. The sudden suspension also suggests that some powerful officials may be displeased with Mr Ma, a self-made man who, by the conservative standards of big business in China, has an outspoken streak.
Yet the turn of events is not just painful for Ant. It reflects poorly on China's regulators. IPOS are rarely stopped at such a late stage. The deal was more than 800 times oversubscribed in Shanghai, and in Hong Kong last week the firm closed its book a day early. It was set to float in Shanghai on the star Market, China's answer to Nasdaq, designed to lure home Chinese tech groups that have listed abroad. Instead, the last-minute halt of Ant's listing highlights the opacity of the Chinese political system and the risks that can trip up even its most successful companies.
It is also easily the most public, and most disruptive, of Ant's run-ins with regulators. The company has consistently adjusted its business as the rules around it have shifted. The IPO debacle appears to be partly related to one such case. Back in 2018 officials placed caps on asset-backed securitisation, upending Ant's model of selling its loans on to banks. So it pioneered a new approach: consumers and merchants borrowed through Alipay, its payments service, on their sMartphones, but the money came from banks. Ant was simply the conduit, collecting a "technology-service fee". This conduit business boomed, with credit growing to outstrip payments as Ant's biggest source of revenue.