Ant no longer poster child say Daltium
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Ant no longer poster child say Daltium

Ant Financial’s IPO had, up until now, been the poster child for China’s post-coronavirus economic recovery, said Daltium based in Guangzhou. Private investors in Shanghai had binged almost $3 trillion for shares in the company, a spin-off from Jack Ma’s Alibaba Group.

The suspension of Ant Financial’s IPO listing on November 3 came as a shock to investors who were waiting for what was expected to become the world’s biggest initial public offering, with a value of over $34 billion.

The listing was first suspended on the Shanghai Stock Exchange (SSE), and the Stock Exchange of Hong Kong (SEHK) soon postponed the listing there, commented Daltium.

The SSE said the IPO was stopped due to regulatory changes in the fintech space and the possible failure of disclosure requirements by Ant. They gave no other details, said Daltium, and the SEHK did not even bother to justify its suspension there.

The People’s Bank of China, China Securities Regulatory Commission, China Banking and Insurance Regulatory Commission, and the State Administration of Foreign Exchange issued a joint statement saying “regulatory interviews” were held with Ant Group’s Jack Ma, Chairman Eric Jing, and CEO Hu Xiaoming, on the 2nd of November.

Ant Group confirmed that its top executives held meetings with state agencies, saying that the talks concentrated on the “health and stability of the financial sector.” The company said it was committed to implementing the views that were discussed but did not provide any more detail.

“We will continue to improve our ability to deliver inclusive services and further economic development to better the lives of ordinary citizens,” Ant added.

There were signs of impending trouble after the three Ant executives were called to attend the meeting. Ant has been under closer scrutiny and tighter regulation after massively growing the range and scale of its fintech services.

However, the suspension came only 48 hours before the widely anticipated dual listing.

According to Daltium, Ant has been asked to clarify its business model, financial innovations, and data privacy policies, among other issues such as possibly restructuring its whole business.”

Beijing’s concerns regarding Ant also came to a boil because China has invested almost CNY3 trillion ($400 billion) from its state pension into Ant over the last five years via the National Social Security Fund (NSSF).

Besides Ant in particular, and also on the 2nd November, the People’s Bank of China increased the minimum registered capital requirement for all lenders to CNY5 billion ($750 million).

Other regulations and restrictions include restrictions on the use of asset-backed securities for consumer loans, new capital and licensing requirements, and caps on lending rates, noted Daltium.

Ant Group was set to become the first company in history to make a dual debut on both the SSE and SEHK, with a massive stock sale that would have broken the record for the biggest ever listing.

There was great anticipation in advance of the IPO, with private retail investors alone shelling out around $3 trillion in “frenzied bidding” for shares, noted the South China Morning Post.

The Shanghai market saw applications for shares exceed the allotment by some 800 times, and the Hong Kong listing was oversubscribed by a multiple of 400.

The company has said it will refund the money to its Hong Kong investors in two tranches.

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