Another story about Chinese authorities reining in critics. This time, a home-grown hero, Jack Ma, known for his successful e-commerce venture, Alibaba, was on the verge of taking public, his fintech group, Ant Group. Ant was hailed as the world’s largest IPO to date, planning to raise $35bn valuing the company at $315bn with its Shanghai leg of the listing getting oversubscribed a staggering 870 times. Earlier this week, following a meeting of Ma with Chinese regulators, the IPO was put on hold. This story in the Bloomberg tries to piece together what is likely to have transpired behind the scenes that led to this eventuality. Whilst the official statement cites tightening regulations and increased capital requirements, the article questions that given the last minute intervention and instead points to Jack Ma’s recent criticism of the Chinese regulatory regime as a possible reason for the debacle.
“Why would China scuttle Ant’s IPO at the last minute after months of meticulous preparation? And what does the future hold for one of the country’s most important companies?
…At a hastily arranged meeting between Ant’s bankers and the CSRC later that evening, officials pointed to the company’s need for more capital and new licenses to comply with a spate of regulations for financial conglomerates that had begun taking effect at the start of November.

One concern among regulators was that the stricter rules may not have been fully disclosed in Ant’s prospectus. On top of the new financial conglomerate regulations, the government had on Monday released stringent draft rules for consumer loans that would require Ant to provide at least 30% of the funding for loans it underwrites for banks and other financial institutions. Ant currently funds just 2% of its loans, with the rest taken up by third parties or packaged as securities.
The CSRC said in a statement on Wednesday that preventing a “hasty” listing of Ant in a changing regulatory environment was a responsible move for the market and investors.
Still, some China watchers have an alternative theory for why Xi’s government acted the way it did: it wanted to send a message. Ma, a former teacher who’s widely revered in China, faced an unusual amount of criticism in state media after he slammed the country’s financial rules for stifling innovation at a conference in Shanghai on Oct. 24. His remarks came after Vice President Wang Qishan — a Xi confidante — called for a balance between innovation and strong regulations to prevent financial risks. “It appeared that, intentionally or not, Ma was openly defying and criticizing the Chinese government’s approach to financial regulation,” Andrew Batson, China research director at Gavekal Research, wrote in a report.
Some investors are bracing for tougher times at both Ant and the rest of Ma’s business empire. Shares of Alibaba Group Holding Ltd., which owns about a third of Ant, tumbled more than 8% on Tuesday in New York for the steepest drop in five years. The slump cut Ma’s wealth by almost $3 billion to $58 billion, dragging him down to No. 2 on China’s rich list behind Tencent Holdings Ltd.’s Pony Ma.”

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