The shock move comes after Chinese regulators warn Jack Ma’s company (FILE)
China has put the brakes on the sale of Ant Group Co.’s $ 35 billion shares to Shanghai and Hong Kong, derailing the world‘s largest IPO.
The Shanghai Stock Exchange will suspend listing after Ma was called in for “supervisory talks” by related agencies, she said in a statement on Tuesday. There has been “a significant change” in the regulatory environment and “such major issues could cause your business to no longer comply with listing or information disclosure requirements,” the statement said.
The Hong Kong leg will also be suspended, Ant said in a filing shortly after the Shanghai announcement. The debut of the fintech company was expected on Thursday. Alibaba Group Holding Ltd., which owns about one-third of a stake in Ant, fell 8% in pre-market trading in the United States. Hong Kong Hang Seng Index futures fell as much as 1.2%.
The shock move comes after Chinese regulators warned that Jack Ma’s company faces greater scrutiny and will be subject to the same capital and debt restrictions as banks. Ma, the billionaire co-founder of Ant, was summoned to a rare joint meeting with the country’s central bank and three other major financial regulators on Monday.
A representative for Ant was unable to immediately respond to a request for comment.
“It’s a really bad look, where you have a Chinese company leading the world‘s largest IPO, blocking billions of global investors and shutting down on the eve,” said Yu Tianjiao, a Hong-based analyst. Kong by Sanford C. Bernstein. “Longer term, investors will re-evaluate Ant’s price, people who have given it high valuations as a tech company will need to start thinking more about it as a financial services company and question the potential of Ant. growth.”
Ant’s decision to list on the Star Board, a market launched in Shanghai last year, was seen as a major victory for the mainland stock exchange. The IPO had attracted at least $ 3 trillion in orders from individual investors for its dual listing in Hong Kong and Shanghai. During the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for more than 76 billion shares, more than 284 times the tranche of the initial offering.
The fintech company’s IPO reportedly gave it a market value of around $ 315 billion on a deposit basis, larger than JPMorgan Chase & Co. and four times larger than Goldman Sachs Group Inc.
“It’s really surprising,” said Mike Bailey, director of research at FBB Capital Partners. “If anything macroeconomically strange happened to the Chinese financial markets or in the company that would be worrying. It would be like we have a problem with Amazon. I would consider it a significant problem for them. It could be something that fuels global markets. “
Ant has come under intense scrutiny in Chinese state media in recent days after Ma criticized local and global regulators for stifling innovation and not paying enough attention to development and opportunities to young people. At a conference in Shanghai late last month, he compared the Basel Accords, which set banks’ capital requirements, to a club for the elderly.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
