Ant Group Postpones its IPO
A Meeting With Regulators and Ant Executives
Ant Group’s IPO in Shanghai and Hong Kong has been postponed. The Chinese fintech giant was expecting to raise about $34.5 billion through its listing, which would have set a record for the largest IPO in history.
However, Chinese regulators called a meeting with Ant Group executives on Monday, including Jack Ma—Ant’s controlling shareholder and a co-founder of ecommerce superpower Alibaba (BABA). Following this meeting, Shanghai’s STAR exchange made a surprise announcement that Ant’s plans for an IPO might no longer meet listing requirements. After the STAR market’s decision, Ant announced it would also hold off on its Hong Kong listing until further notice. Neither Ant nor regulators have discussed what transpired in the Monday meeting.
Ant’s Recent Strategy
Ant is responsible for huge changes in the way Chinese people deal with money in their daily lives. The company’s app has 730 million users. It offers a digital payment system as well as loans, insurance, investment opportunities, and more.
For some time, Ant has faced scrutiny from regulators in China. In response to regulatory concerns, Ant has changed its business model. It now focuses on connecting banks to consumers rather than using its own money to loan out as it once did.
Ant’s recent strategies seem to have been successful. The company’s market valuation after the dual listing was expected to be over $310 billion, making it more valuable than many international banks. However, Ant’s future is heavily dependent on decisions from Chinese regulators.
New Regulations Could Impact Ant
On Monday, the China Banking and Insurance Regulatory Commission, one of the regulators involved in the Ant meetings, proposed a new set of regulations for online lenders that could require Ant to make changes to its business model. These changes could include setting aside more money for the loans it makes and putting more credit risk on its balance sheets.
The future of Ant’s IPO as well as the reason why it has been called off for the moment remain uncertain. Some are suggesting that the Chinese government wants to remind private businesses of its power. However, Beijing has been striving to grow its capital markets recently, and the decision to stand in the way of an IPO could discourage large companies from listing in the country in the future. Ant investors will be carefully watching for clues about if and when the listing will happen, and how new regulations may impact Ant’s future.
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