Ant Group pulls blockbuster IPO after regulators express concerns

Company plans to return the funds it had accumulated from investors who subscribed to its IPO

For months, the fintech universe has been abuzz about the Ant Group Co.’s planned blockbuster initial public offering.

China-based fintech Ant Group – the parent company of Chinese payments giant Alipay – was expected this week to be selling over 10 percent of its shares in a dual Hong Kong-Shanghai listing at an eye-popping valuation of about $225 billion, as reported by Fortune

The world’s largest technology startup was expected to bring in at least $34.4 billion in the concurrent IPOs when it was slated to begin trading on Nov. 5. The public debut was touted as being the world’s largest-ever IPO, expected to top the record $29.4 billion raised by Saudi Aramco last year.

But on Monday, reports revealed that China’s central bank and its securities, banking and foreign-exchange regulators met with billionaire Jack Ma (Ant’s controlling shareholder) and the top two executives of Ant Group to address regulatory concerns.

Then this morning, we woke up to the news that the Shanghai Stock Exchange had postponed Ant Group’s massive IPO, essentially disqualifying it from listing.

According to the Wall Street Journal, the company said late Tuesday that its Hong Kong listing would also be suspended and that it planned to return the funds it had accumulated from investors who subscribed to its IPO.

In a Nov. 3 letter to investors, Ma wrote: “Ant Group sincerely apologizes to you for any inconvenience caused by this development. We will properly handle the follow-up matters in accordance with applicable regulations of the two stock exchanges.

We will overcome the challenges and live up to the trust on the principles of: stable innovation; embrace of regulation; service to the real economy; and win-win cooperation. We will continue to serve small and micro businesses and ordinary citizens with our passion, professionalism and commitment for society. We will keep in close communications with the Shanghai Stock Exchange and relevant regulators, and wait for their further notice with respect to further developments of our offering and listing process and disclose in a timely manner.”

The news was shocking to say the least to those of us who have been paying attention with a mix of awe and wonder. 

Unsurprisingly, the postponement sent Ant Group’s shares down.

Perhaps we shouldn’t be too shocked, though, considering that – as TechCrunch reports – in late October, Ma gave a “provoking speech” that was critical of China’s financial regulation. China’s senior leaders were reportedly in attendance.

Coincidentally, China’s financial authorities issued a new wave of proposals aimed at reining in the fintech sector, as Tech Crunch also points out.

FinLedger recently examined what U.S. and European fintechs could learn from Alipay’s success. Now, it seems we need to determine what U.S. and European fintechs can learn from Ant Group’s IPO woes.

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