Compliance
How China's Ma Tried To Save Ant Group IPO - Report

Ant Group is involved in a number of areas, including - by certain definitions - wealth management via its Ant Fortune platform. Its IPO in early November was suddenly cancelled, widely attributed to regulators said to be alarmed about lending and potential exposures.
Chinese multi-billionaire Jack Ma had tried to salvage his
relationships with Beijing by offering to hand over parts of his
financial technology giant, Ant Group, the IPO of
which had been suddenly cancelled in early November.
The Wall Street Journal, citing unnamed sources,
reported that Ma said: “You can take any of the platforms Ant
has, as long as the country needs it.” Ma had had a sit-down
meeting with regulators, the newspaper said.
Ant Group, an affiliate of the e-commerce giant Alibaba which Ma founded, had
been slated to have its $34 billion initial public offering more
than a month ago in what would have been the world’s largest
ever. However, investors were stunned when the IPO was pulled
only a few days prior to the event.
Ma had in-person meetings with regulators overseeing securities,
banking and insurance. That 2 November meeting took place a few
days before Ant was supposed to go public, the report said. It
continued that President Xi of China personally ordered Chinese
regulators to investigate the risks posed by Ant, according to
Chinese officials with knowledge of the matter, and to shut down
the IPO.
The saga casts light on how the world’s second-biggest economy,
which like others has been hit by the COVID-19 pandemic, has
sought to prevent fissures opening in its financial system.
The WSJ report added that there is no decision, for now,
to take Ma up on his offer. One plan being considered involves
subjecting Ant to tighter capital and leverage regulations. Under
that scenario, state banks or other types of state investors
would buy into Ant to help cover any potential capital shortfall
as a result of the tightened rules.
The saga underlines how Chinese regulators are concerned that
their ability to control financial flows – and prevent future
stresses – is potentially challenged by tech-driven financial
services organisations such as Ant Group.
A separate report (6 December) by the WSJ said that Ant
Group’s rapid lending growth rattled regulators. In just one
year, Ant Group had written loans to half a billion people in
China which accounted for nearly a fifth of the country’s
outstanding short-term consumer debt as of June.
“People familiar with Ant’s micro-lending operations, including
the company’s banking partners, competitors, investors and
industry analysts, say regulators are especially concerned about
the rural and city commercial banks and trust companies that have
supplied a significant amount of funds to Alipay users,” the news
organisation said.