- Shanghai Stock Exchange postponed Ant Group’s $37bn (£28.3bn) IPO two days before it was scheduled to go live
- A reminder to investors that Chinese companies are on a tight leash
The Shanghai Stock Exchange (SSE) has postponed Ant Group’s $37bn public offering, just a day after Chinese regulators summoned founder Jack Ma and other Ant executives for an interview. The financial technology company was on track to list on 5 November on the Shanghai and Hong Kong bourses in what would have been the world’s biggest IPO.
The eleventh-hour decision to derail the listing is a reminder of the power of Chinese authorities in the private sector. Indeed, the SSE cited the fact that Mr Ma had been called for “supervisory interviews”, as well as flagging “major issues” such as “changes in the financial technology regulatory environment.” Shares in parent ecommerce group Alibaba (US:BABA) were down 8 per cent in New York trading on the day of the announcement.
Following the statement by the Shanghai Stock Exchange, Ant Group said that its listing in Hong Kong will also be suspended. The payments group also committed to embracing regulation in its statement – but it seems that the Chinese authorities have yet to make up their mind on what this should look like.
The IPO would have been significant for a number of UK-listed investment trusts that count Alibaba in their top five holdings, including JPMorgan Emerging Markets (JMG), Schroder Asian Total Returns (ATR) and Scottish Mortgage (SMT).
Chinese retail investors too are holding their breath: the offering has attracted a flurry of ‘mom-and-pop’ buyers, who have reportedly put in bids worth $3 trillion in Hong Kong and Shanghai. Yet here lies the risk in betting on China: while companies enjoy colossal scale, technological innovation and often government support, they can also be undone by their makers.
The storm around Ant Group’s IPO has not dashed its prospects of being one of the most valuable companies in the world - indeed, such a feat would likely be looked upon favourably by the Chinese state. However, investors should take note: the stalled listing, last-minute interviews and regulatory confusion will mark a shaky first step onto the public markets, and perhaps a tricky path ahead.
