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The Shanghai and Hong Kong stock exchanges have postponed the public offering of the Chinese tech giant Ant Group for an indefinite period. This decision was made two days before the start of the IPO process which is expected to become the largest in the world.
On November 2, the People’s Bank of China and three other regulators summoned the company’s founder, Jack Ma, and other executives for a supervisory interview on its future listing.
The possible argument of the query
Although the details of this conversation were not disclosed, the Shanghai Stock Exchange reported that the parties had turned. “major problems“, including changes to” financial technology regulation “.
“This relevant fact could result in your company not meeting the issuance and listing conditions or not meeting the disclosure requirements,” the exchange spokespersons wrote in a statement explaining their decision.
Previously, Ant Group’s public offering was valued at 37 billion dollars.
The People’s Bank of China was published on 2 October a new invoice on online lending that would force Ant Group to limit its maximum loan amount to nearly $ 44,900 or one-third of the borrower’s annual payment. Once approved, these rules could also make assignment more difficult in all provinces of the country. Therefore, some analysts predict that such a novelty would affect the company’s bottom line.
Regulator official Guo Wuping argued for greater regulation of Ant and other fintech companies, noting that their consumer loans charge higher rates compared to credit cards issued by banks. According to the expert, these companies often attract young people to overspend, so that some of them with low incomes “fall deep into debt traps”.
Now, the company should do it Act which include capital increases in their lucrative microcredit units, sources familiar with the case, who preferred to remain anonymous, told Bloomberg. Additionally, Ant Group should re-apply for licenses so that its units can operate nationwide.
After learning this news Ant Group has apologized to its investors and stated it would “maintain close communication with the Shanghai Stock Exchange and key regulators … regarding further developments in their listing and offering processes.”
The issue goes beyond mere regulation
However, not all analysts agree that the cause of this delay lies in changes in financial regulation. Some warn that in this way the Chinese authorities try teach Jack Ma a lesson for his criticism of the banks.
No one is interested in canceling appointments at this stage, the director of a Shanghai-based brokerage firm, who preferred to remain anonymous, told the British newspaper The Financial Times.
“I’ve never seen a PTA suspended at this stage. I don’t think there is a precedent for this kind of situation,” he added.
By the end of October, But he criticized Chinese state banks during a financial summit in Shanghai. In particular, he suggested that large lenders had a “pawn shop” mentality and that Ant Group was playing an important role in lending to innovative companies and individuals with low collateral.
This dramatic turnaround is something of a reminder to Chinese companies and their investors that they have yet to be accountable to the country’s major regulators, the British media write.
“Jack Ma clearly miscalculated [su estrategia]. By spending months with his head down, he made many enemies, ”said Chen Zhiwu, a professor of finance at the University of Hong Kong.
Another executive at a large international bank in Hong Kong noted that Ma’s interview made it clear that Beijing is trying to gain control of his company before it “becomes uncontrollable.”
“When he recently attacked bankers, he was seen as arrogant and reckless. Banks in China are not part of the core of the traditional financial system, they are an extension of the country’s monetary policy,” the expert recalled.
Ant Group was founded by Jack Ma in 2004 as Alipay, being an arm of Alibaba, and was renamed Ant Group ten years later. Since then, its payment business has grown into the largest in the world, surpassing that of Visa and MasterCard. In June 2020, the Chinese giant processed around $ 17 trillion in transactions in one year.
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