Regulators sent a shock wave through the markets when the Shanghai Stock Exchange announced on November 3 the suspension of the mega IPO of Ant Group, a financial firm operating under the umbrella of e-commerce giant Alibaba, less than two days ahead of the listing.
According to the announcement, the postponement is due to drastic changes in the financial environment, which means Ant Group may no longer meet the listing conditions or disclosure requirements. The IPO on Hong Kong’s stock exchange was also suspended.
Based on the mobile payments service Alipay, Ant Group now focuses on online lending. Its listing was scheduled for November 5 with a reported market valuation of US$280 billion, higher than China’s biggest commercial bank, the Industrial and Commercial Bank of China. Analysts warned that Ant Group is “earning more bang for a buck,” as the majority of its capital is not self-possessed, but from other financial organs or from asset-backed securitization (ABS).
On November 2, three days before Ant Group’s original IPO date, Chinese financial regulators issued a draft regulation which sets the minimal capital ratio at 30 percent for syndicated loan providers and maximum amount of non-standard financing. The restrictions, analysts said, might halve Ant’s original market value.
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