Ant Group’s IPO is suspended after Chinese regulators raised concerns following interviews with key individuals associated with the company, including Jack Ma, who controls Ant.
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Ant Group Co. Ltd.’s planned initial public offering is on hold after regulators in China raised concerns about whether the company met the requirements for listing on the Shanghai exchange.
The Chinese fintech giant was on track for the largest IPO in history through a concurrent listing on the Shanghai and Hong Kong stock exchanges, but it confirmed that both were suspended as of Tuesday morning. Alibaba was set to raise more than $34 billion through the offering.
Shares of Alibaba Group Holding Ltd.
BABA,
which has a 33% stake in Ant through its subsidiaries, were off 6.7% in Tuesday morning trading. That puts them on track to suffer the biggest one-day decline since they fell 7.8% on March 16.
Chinese regulators notified Ant Tuesday that its proposed listing on the STAR Market in Shanghai was suspended as Ant “may not meet listing qualifications or disclosure requirements” following interviews with key executives, according to Ant’s release. “Consequently, the concurrent proposed H Share listing on the Main Board of The Stock Exchange of Hong Kong Limited shall also be suspended,” Ant said.
Shares were supposed to begin trading Thursday and demand for the offering was strong, according to reports. For the Shanghai portion of the IPO, bids from retail investors equated to 872 times the number of shares set out for this group, Reuters reported.
Regulators reportedly raised concerns about Ant’s powerhouse lending business, according to Reuters. While Ant is perhaps best known for its digital-payments platform, the company also runs a credit business that allows the company to originate loans underwritten primarily by financial-industry partners.
Chinese regulators are increasingly worried about banks using tech-based platforms like Ant in the lending process “amid fears of rising defaults and deteriorating asset quality in a pandemic-hit economy,” Reuters reported Tuesday, citing multiple unnamed sources.
Ant said in its Tuesday release that it would provide further details about the suspension of the Hong Kong listing as well as information about the refund of application fees “as soon as possible.”
Alibaba’s stock has gained 12.4% over the past three months, while the iShares MSCI China exchange-traded fund
MCHI,
has advanced 7.1% and the S&P 500 index
SPX,
has tacked on 2.8%.
