The Chinese government has pulled the rug under fintech giant Ant group’s cascade to the largest IPO in history. It made a last minute decision to suspend the record. Leaving investors reeling and employees distressed. The shares of Ant Group affiliate, Alibaba, have been hit as the pay giant comes to grips with the the abrupt grounding of the IPO.
The decision was announced on late Tuesday, less than 2 days before shares were to begin trading and a day after Ma was summoned by regulators amid growing official pushback against the company.
The move, unsurprisingly was taken as a signal from the nation’s communist leaders that they were uncomfortable with the enormous influence of Ant Group. Despite the fact that the company has helped revolutionise commerce and personal finance in China. At the same time, it has watered down the power of state financial institutions.
The sudden suspension followed warnings in Chinese state media about potential financial instability from Ant Group’s rapid growth and after Ma, 56, triggered repercussions with comments late last month about regulators.
Speaking at a Shanghai business forum, Ma found fault with regulators. Saying that they were heavy-handed and out of touch with the needs of regular consumers. He went ahead to blame them for stifling fintech innovation.
Speculation is rife that Ma’s comments were the last straw for the Chinese government, which tolerates no criticism or questioning.
“The government’s goal is to remind the company who is in charge of the financial system, not to put it out of business,” said Andrew Batson, director of China research in Gavekal Research.
He said Ant will certainly return to list in Shanghai and Hong Kong, but the company may have to make substantial changes to its internal organisation and business model to comply with new regulatory requirements. It would also have to change disclosures and risk factors listed in its listing prospectuses.
Ant’s Alipay platform has played an instrumental role in changing the narrative about commerce and personal finance in China. With consumers using the smartphone app to pay for everything from meals to groceries and travel tickets.
But Ant Group, which has more than 700 million monthly active users, has also bit on the toes of China’s tightly state-controlled finance sector by venturing into personal and business lending, wealth management and insurance.
The IPO would have made Ma Asia’s richest person, according to Bloomberg News, but instead his net worth tumbled by around $3 billion after Alibaba’s US-listed shares plunged.
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