The news created astonishment in the markets yesterday and led to a plunge in Alibaba shares. Indeed, the long-awaited introduction of its subsidiary Ant Group has been suspended in Hong Kong and Shanghai, whereas it was due to take place tomorrow. It should be remembered that this was to be the largest IPO in the world from a historical point of view.
The Chinese online payment specialist will therefore not be listed on the STAR market of the Shanghai stock exchange this Thursday as expected. This decision has also led to the suspension of the IPO on the Hong Kong stock exchange.
In a statement issued on the subject, the Ant Group said it had taken this decision after a meeting with the regulatory authorities, Alibaba founder Jack Ma and senior executives of the company. The meeting was a major meeting as reported by the Shanghai Stock Exchange. According to the release, the group said it may not meet registration or regulatory reporting requirements. The group also mentioned recent changes in the regulatory environment for financial or fintech technology companies.
Let us recall that the introduction of Ant Group on the financial markets of Shanghai and Hong Kong which was planned on Thursday should enable the company to raise nearly 37 billion dollars or 31.57 billion euros. This sum would have been a real record for an IPO after the previous record of Saudi Aramco which had raised 29.4 billion dollars.
It was during a meeting on Monday that the executive chairman and the director general of the Ant Group were informed, as well as the reps.financial regulators that the group's online lending business was to be placed under tighter government control, as sources close to the file have indicated.
Moreover, the meeting took place at a time when Chinese authorities were in the process of publishing a new draft regulation on online microcredit. Late last month, Jack Ma said that this financial regulation was ill-suited to companies that used technology to promote financial innovation.
However, the Chinese government is becoming increasingly reluctant for banks to use third-party technology platforms such as Ant Group to underwrite consumer loans and fears an increase in payment defaults and a deterioration in asset quality in an economy still affected by the pandemic. With this decision, the ruling Communist Party showed the industrial giants that it still had the upper hand, because even the richest man in the world had no say in the matter. Of course, investors reacted immediately to this announcement and Alibaba's share price lost 6.64% during Tuesday's session.