China Postpones Ant IPO After Jack Ma Meeting

The Shanghai stock exchange declared a postponement of Ant Group’s exceptionally large initial public offering, following a day of scrutiny from Chinese regulators who introduced a series of new fintech regulations and requested a meeting with Jack Ma and other leading company officials.

This unusual discussion between China’s foremost financial regulators and Ant, which highlighted “significant alterations in the fintech regulatory landscape,” potentially prevents the company from proceeding with its listing on November 5, as stated by the exchange in a release on the evening of November 3.

The precise nature of these “alterations” remains unspecified, although the exchange has requested Ant to provide full disclosure. It is important to remember that in late October, Ma delivered a critical address concerning China’s financial regulation. This gathering included prominent Chinese leaders and subsequently generated considerable debate.

Ant has suspended its IPO in Hong Kong, where a simultaneous listing was planned, after receiving notification from Shanghai, the company communicated in a statement.

“We deeply regret any disruption this may cause to investors. We will diligently address subsequent matters in accordance with the regulations of both exchanges,” the statement read.

Ant has consistently sought to maintain a positive relationship with governing bodies. The company’s rebranding from Ant Financial to Ant Technology earlier this year was perceived as an effort to diminish its image as a formidable financial entity and emphasize its role as a supportive technology provider. This initiative, launched several years ago, led the firm to introduce unconventional terms like “techfin” (contrasting with “fintech”) and assert it did not compete with established financial institutions, many of which are state-controlled.

These assurances were not merely symbolic. Ant has steadily evolved into an online platform connecting hundreds of millions of users with financial products offered by conventional institutions. It has also welcomed significant state-owned entities, such as the National Social Security Fund and China International Capital Corporation, as shareholders, positioning them to benefit substantially from their investments.

However, these efforts apparently proved insufficient. China’s financial authorities released a new set of proposals on Monday to regulate the fintech industry, just days before Ant was scheduled to raise $34.5 billion in what would have been the world’s largest initial public offering. While the draft regulations do not directly mention Ant, their release coincided with the meeting between financial regulators and Ant’s executives.

“Discussions centered on the well-being and stability of the financial system,” an Ant spokesperson informed TechCrunch in a prior statement. “Ant Group is dedicated to fully implementing the outcomes of the meeting and continuing our operations based on the principles of: prudent innovation; regulatory acceptance; support for the real economy; and mutually beneficial collaboration.”

This message underscored Ant’s commitment to aligning with the directives of Beijing.

“We will continue to enhance our capabilities to deliver inclusive services and foster economic growth, ultimately improving the lives of everyday people,” the company added.

This proposal represents the latest step in China’s ongoing endeavor to stabilize its rapidly expanding fintech sector. The proposed rules include a prohibition on online loans extending across provincial boundaries without explicit authorization; a maximum individual online loan limit of 300,000 yuan ($45,000); and a minimum registered capital requirement of 1 billion yuan ($146 million) for online microloan providers.

A key concern is the substantial growth of Ant’s lending operations, which accounted for 41.9 billion yuan, or 34.7%, of its total annual revenue, according to the company’s IPO prospectus. As of June 30, Ant had collaborated with approximately 100 banks, facilitating 1.7 trillion yuan ($250 billion) in consumer loans and 400 billion yuan ($58 billion) in small business loans.

In recent years, China’s financial regulators have implemented numerous other policies to limit the growth and profitability of fintech companies. For example, Ant’s Alipay payment service and its competitors were restricted from earning profits from customer reserve funds starting last year.

This article was updated on November 3, 2020 with Ant’s announcement.