China halts Ant Group’s IPO, throwing Ma empire into turmoil

4 noiembrie 2020

Chinese authorities have abruptly thrown into doubt the future of Ant Group Co. and its celebrated founder, the billionaire Jack Ma, Bloomberg reports.

Chinese authorities didn’t give much detail about the issues behind the suspension, beyond saying that the much-anticipated debut couldn’t go ahead because there had been “significant change” in the regulatory environment. „Company reported major issues such as changes in the financial technology regulatory environment,” according to the Shanghai Stock Exchange.

The company will have to make changes that include capital increases at its lucrative micro-lending units, according to people familiar with the matter. It will also have to reapply for licenses for the units to operate nationwide, the people added, asking not to be identified discussing a private matter.

The IPO is expected to be delayed by about six months, and funds will be returned to investors in the meantime, news portal QQ.com reported, citing an unidentified person.

“Ant Group sincerely apologizes to you for any inconvenience caused by this development,” the company said in a message to investors. “We will properly handle the follow-up matters in accordance with applicable regulations of the two stock exchanges.”

Only days before the financial-technology juggernaut was to go public in Shanghai and Hong Kong — a coup for China’s financial markets that once would have been unimaginable — the $35 billion IPO was halted on Tuesday after Ma was summoned by regulators. In an extraordinary turn of events, authorities announced that they had belatedly discovered an array of shortcomings that, by some accounts, might require the sprawling Ant to be overhauled.

“The way I’d read it, it’s a deliberate public relations move,” said Sean Darby, chief global equity strategist at Jefferies. “This has happened before when companies appear to have become too big versus the state for the authorities’ liking.”

There were warning signs on Monday when Ma was summoned to a rare joint meeting with the People’s Bank of China and three other top financial regulators and told his firm would face increased scrutiny and be subject to the same restrictions on capital and leverage similar to banks.

“This further reinforces the regulatory pressures building on tech giants,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd. in Sydney. “It’s good news for banks, bad news for Jack Ma,” he said, referring to the competitive threat Ant poses for traditional lenders.

“We have to figure out the convenience for our consumers as well as the risk, and how to make the financial service more safe,” the People’s Bank of China’s governor Yi Gang said on Monday at a Hong Kong financial technology summit.

Ant has faced scrutiny in Chinese state media in recent days after Ma criticized local and global regulators for stifling innovation and not paying sufficient heed to development and opportunities for the young.

Today’s financial system is the legacy of the Industrial Age,” Ma said. “We must set up a new one for the next generation and young people. We must reform the current system.”

At a Shanghai conference late last month, he compared the Basel Accords, which set out capital requirements for banks, to a club for the elderly.

Francis Lun, CEO of Geo Securities told Reuters: “The Communist Party has shown the tycoons who’s boss. Jack Ma might be the richest man in the world but that doesn’t mean a thing. This has gone from the deal of the century to the shock of the century. Jack Ma got ahead of himself by criticising the commercial banks and the regulatory regime.

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Gabriela Nistor – director general adjunct BT

Tendinţele pe care le-am remarcat înainte de începerea pandemiei s-au accelerat pe perioada stării de urgenţă. Am văzut acest lucru ca o oportunitate, un tipping point pentru bancă. Post-pandemie nu avem cum sa ne întoarcem la comportamentul financiar pe care îl aveam până în februarie a.c. Relaţia românilor cu online-ul s-a schimbat. In plus, cardul fizic se va dematerializa. Vom asista la o scădere a cererii pentru cardurile fizice, respectiv la o creştere a preferinţei pentru componenta digitală a acestora.”

Sondaj

In 23 septembrie 2019, BNR a anuntat infiintarea unui Fintech Innovation Hub pentru a sustine inovatia in domeniul serviciilor financiare si de plata. In acest sens, care credeti ca ar trebui sa fie urmatorul pas al bancii centrale in 2020?