Market debut of Chinese e-finance giant Ant Group postponed
05 November, 2020
The planned currency markets debut of the world's biggest online finance company, Ant Group, was suspended in Shanghai and Hong Kong on Tuesday, disrupting a record-setting $34.5 billion initial public offering that highlighted China's recovery from the coronavirus pandemic.
The Shanghai stock market cited regulatory changes in Ant's industry and a possible failure to meet up disclosure requirements but gave no details. Ant said later it could suspend its Hong Kong debut because of the Shanghai suspension. Shares were to have started trading on both exchanges Thursday.
The suspension followed a Monday meeting between regulators and Ant executives including founder Jack Ma, China’s richest entrepreneur. Ma also founded Alibaba Group, the world's biggest e-commerce company by sales volume, which spun off its Alipay payments service to create the company that became Ant Group.
“Views regarding the health insurance and stability of the financial sector were exchanged,” Ant Group said in a prepared statement. The company said it was “focused on implementing the meeting opinions” but gave no details.
“We will continue steadily to improve our capabilities to supply inclusive services and promote monetary development to increase the lives of ordinary citizens,” the business said.
Ant apologized to investors and said it could await notice from regulators about further developments. U.S. shares of Alibaba tumbled a lot more than 8% Tuesday at the opening bell, matching the company’s largest percentage decline since its first day of trading on the brand New York Stock Exchange.
Ant operates Alipay, the world’s biggest financial technology company and, along with Tencent’s WeChat Pay, one of two dominant electronic payment systems in China.
In a joint statement, the Chinese central bank, securities regulator and other agencies said Monday that they had “regulatory interviews” with Ma, Ant Group chairman Eric Jing and president Hu Xiaoming.
It was hoped that Ant's debut would put a spotlight on the economic rebound of China, the first major economy to return to growth after the coronavirus pandemic began last December.
The decision to go public on exchanges in both Shanghai and Hong Kong reflected the evolving nature of China’s fast-growing financial markets and their relationship to fledgling private sector corporate giants such as Ant and Alibaba.
Mainland markets are off-limits to many foreign investors and until recently were used mostly to improve money for state-owned industry. Private sector companies and the ones that wanted usage of foreign investors sold shares in Hong Kong, NY or other offshore centers. Alibaba went public in NY instead of on a mainland exchange.
Recently, the ruling Communist Party has been encouraging make use of mainland markets to raise money for private sector companies that generate almost all of China’s jobs and wealth and give Chinese investors an opportunity to benefit from their growth.
Ant’s earlier announcement of its plan cited “innovative measures” in Shanghai and Hong Kong, which created separate trading boards for tech stocks. It said “industry leading technology companies” could have “greater access to the administrative centre markets.”
Ma founded Alibaba in 1999 to greatly help link Chinese wholesalers with foreign retailers. Alipay was made to facilitate payments within an economy where few persons had credit cards.
Alibaba currently owns one-third of Ant Group.
Alipay was transferred in 2011 from Alibaba Group to a company controlled by Ma. That prompted complaints Ma didn't inform shareholders including Yahoo Inc. and Japan’s Softbank.
Alibaba said the move was necessary to comply with Chinese regulations, but some financial analysts said the business was paid inadequate. The dispute was later resolved by Alibaba, Yahoo and Softbank.
Alipay became a freestanding company in 2014 and was renamed Ant Financial. It had been renamed Ant Group before its currency markets debut.
Ant Group's shares were due to start trade in Hong Kong and Shanghai on Thursday after it raised at least $34.5 billion. Retail investors in Shanghai placed bids for practically $3 trillion worth of shares.
The business has come under increased scrutiny and tighter regulation since it expanded the number of financial technology services it provides. Among the new regulations are caps on the utilization of asset-backed securities to fund consumer loans, new capital and licensing requirements and caps on lending rates.
On Monday, the central bank raised the minimum required capital for lenders such as for example Ant to a 5 billion yuan ($750 million).
Source: japantoday.com
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