The massive US$34.5 billion IPO by Jack Ma’s Ant Group has been derailed by regulatory action, days before its listing, and that does not make the investors happy, says political analyst Shaun Rein at AP. The decision also might rattle Chinese entrepreneurs who were considering selling shares on their own country’s market, said Rein.
The planned market launch of Ant, spun off from Alibaba Group, the world’s biggest e-commerce company by sales volume, symbolized China’s rebound and added to a string of smaller offerings by biotech and other new companies. In an unusual move, it was due to trade in both Shanghai for mainland investors and in Hong Kong for international buyers.
A brief official announcement Tuesday cited regulatory changes. It gave no details, but authorities have tightened controls on lending by online finance platforms and raised the amount of capital they must have.
The abrupt action might make investors more cautious about China, said Shaun Rein of China Market Research Group in Shanghai, whose clients include hedge funds and institutional investors. He said they are left to wonder whether regulators were worried about risks or acted out of irritation at Ant founder Jack Ma, China’s richest entrepreneur, who publicly complained they hamper innovation.
“Whatever it is, it doesn’t make the system look good,” Rein said. “It makes a lot of global institutional investors more nervous about investing into China.”
Ant said Wednesday it will return subscription fees to investors, suggesting it might be some time before the company is allowed to offer shares to the public…
The decision also might rattle Chinese entrepreneurs who were considering selling shares on their own country’s market, said Rein.
“Until yesterday, every entrepreneur I talked to wanted to go public in the mainland, because they thought valuations would be better, and it might make them look better in front of the government,” said Rein. “Now, after Jack Ma, I’m not sure what they’re going to do.”
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