Ant Group’s document $ 34.5 billion IPO in Shanghai and Hong Kong is suspended

SHANGHAI, China – Ant Group’s world record IPO in Shanghai and Hong Kong has been suspended.

The stock exchanges in Shanghai and Hong Kong announced this on Tuesday. Alibaba, which owns around 33% of the Ant Group, saw its Hong Kong-listed stocks drop more than 7% in Asian trading on Wednesday.

Ant Group’s controller Jack Ma, chairman Eric Jing and CEO Simon Hu were summoned and interviewed by regulators in China Monday, according to a statement by the China Securities Regulatory Commission.

On Tuesday, the Shanghai Stock Exchange referred to that meeting to explain why it has suspended its IPO.

According to a CNBC translation of the Mandarin statement, Ant has reported “significant issues such as the changes in the regulatory environment of financial technology.” “These issues could result in your company not complying with the listing or disclosure requirements for information.”

As a result, the exchange decided to suspend the company’s listing on the Science and Technology Innovation Board, also known as STAR Market – China’s version of the tech-heavy Nasdaq.

Shortly thereafter, the Ant Group announced that the listing of Hong Kong shares would also be suspended.

The Ant Group was preparing to raise nearly $ 34.5 billion on the world’s largest public listing. A double listing in Shanghai and Hong Kong was planned on Thursday.

In a statement to CNBC, an Ant Group spokesman apologized for suspending its IPO and will resolve regulatory concerns about the Hong Kong and Shanghai stock exchanges. The company said it suspended its Hong Kong listing after being informed by the Shanghai Stock Exchange that the IPO would be delayed.

“Ant Group sincerely apologizes for the inconvenience this development may cause,” the statement said. “We will properly handle the follow-up in accordance with the applicable regulations of the two exchanges. We will meet the challenges and live up to trust in the principles: stable innovation; acceptance of regulation; serving the real economy; and win-win cooperation. “

On Monday, China’s central bank and regulators issued new draft rules on online microloans that could affect the Ant Group.

In a statement, an Alibaba spokesman said the company would assist Ant Group with regulatory hurdles.

“We will proactively support the Ant Group to adapt to the developing legal framework and to accept them,” said the spokesman. “We have full confidence in the ability of colleagues in Ant Group to do a good job. Society has high expectations of Alibaba. We will continue to work hard to not only meet expectations, but to exceed them and our responsibility to society to comply. “

Jack Ma comments in focus

At the end of last month, Alibaba founder Jack Ma was critical of China’s financial regulator.

“Today’s financial system is the legacy of the industrial age,” Ma said. “We have to create a new one for the next generation and young people. We have to reform the current system.”

Sam Radwan, CEO of management consultancy Enhance International, said his comments may have played a role in the Ant Group’s initial public offering.

“I don’t think it was good for Jack Ma to criticize the company, which is calling for the Ant Group’s full cooperation in its ongoing reforms,” ​​Radwan, who advises China’s banking regulator, told CNBC via email.

“Financial institutions know very well who is in charge, and they’d better be careful.”

In recent years, Chinese regulators have been increasingly concerned about the rise of fintech platforms offering credit and whether they pose a systemic risk to the economy. The authorities have also kept an eye on companies like Ant Group, which they believe provide banking-like services even though they are not a bank.

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