Beijing, Nov 3 (efe-epa).- Chinese fintech giant Ant Group’s much-anticipated $34.5 billion initial public offering was abruptly suspended on Tuesday, a day after regulators held a meeting with the company’s controlling shareholder, Jack Ma, and senior executives.
In a statement to investors to which Efe obtained access, Ant said the Shanghai Stock Exchange informed the company about the freezing of its leg of the IPO. Ant subsequently decided to call a halt to the Hong Kong portion of the dual listing, which was to have taken place on Thursday.
The Shanghai exchange cited the meeting and significant changes to the regulatory environment reported by Ant in moving to suspend what would have been a world-record IPO.
On Monday, the China Securities Regulatory Commission (CSRC) announced that it had summoned Ant’s controlling shareholder, Jack Ma, and two other top company executives to a meeting.
Few details have been released about the meeting, which also was attended by representatives of the China Banking and Insurance Regulatory Commission (CBIRC), the foreign exchange regulator and the People’s Bank of China.
The surprise meeting sparked fears among prospective Ant investors that the Chinese government, which has expressed its intention to more closely regulate the fintech sector, would step up its oversight of the company.
Ant operates Alipay, which is China’s largest e-payments platform and also a major facilitator of loans to small businesses and consumers that may be unable to access bank financing.
Ant, which said participants in the meeting exchanged points of view about the health and stability of the financial sector, had expressed its commitment to implementing authorities’ “opinions in-depth.”
Ma – one of China’s wealthiest individuals and the founder and ex-chairman of e-commerce giant Alibaba Group, Ant Group’s former parent company – caused controversy at a financial forum in Shanghai late last month when he accused financial regulators in the Asian nation of stifling innovation by being too risk averse.
That criticism, however, was not given as an official reason for the IPO suspension.
Ma also took aim at traditional banks during that forum, saying they are run like “pawn shops” because loans are contingent on collateral (as opposed to credit ratings based on advanced computer algorithms) and stressed the need for alternate financing channels such as those offered by Alipay.
French corporate and investment bank Natixis’s chief economist for the Asia-Pacific region, Alicia Garcia Herrero, told Efe after learning about the IPO suspension that Ma has been criticizing Chinese regulators for some time.
Regulators, for their part, are demanding that Ant comply with new capital requirements now being imposed on financial entities as of Nov. 1, she said.
Due to a lack of commitment on Ant’s part, there apparently was no other choice but to suspend the IPO, the analyst said.
On Monday, the People’s Bank of China and the CBIRC published new draft rules for fintechs that include greater leverage limits, as well as a floor on capital contributions for certain loans funded jointly with banks by online micro-lenders like Ant, whose financing business involves facilitating transactions between borrowers and lenders.
Those moves could hamper Alipay’s two small-loan subsidiaries, Huabei and Jiebei, which now will either need to put up more capital or reduce the size of their loans to comply with those measures.
Separately, Chinese news portal Caixin on Tuesday published a text from the director of CBIRC’s Consumer Protection Office, Guo Wuping, in which he talked about the lack of “uniform standards” for fintechs and put forward Huabei as an example.
Ant had attracted heavy investor demand and planned to raise $34.5 billion from the IPO, an amount that could have risen to as high as $39.6 billion if the company exercised its greenshoe, or overallotment option.
The price per share set by the fintech for the concurrent IPO on the Shanghai and Hong Kong stock markets valued the company at more than $313 billion.
After the news of the IPO suspension, the United States-listed shares of Alibaba Group Holding, which has a 33 percent stake in Ant Group through its subsidiaries, plunged nearly 8 percent in its worst trading day since 2015.