Ant Group’s Long March
The abrupt suspension of Ant Group's IPO may reflect Chinese authorities' displeasure over a recent speech by the fintech conglomerate’s controlling shareholder, Jack Ma, who was critical of financial regulations that he believes show insufficient understanding and support for fintech innovation. Is Ma right?
NEW YORK – The Chinese fintech conglomerate Ant Group, known for its digital payments and other online financial services, has just been stopped in its tracks, after Chinese regulators suspended its simultaneous public listing, originally scheduled for November 5, on the Hong Kong and Shanghai Stock Exchanges. The suspension is possibly in response to a recent speech by Jack Ma, Ant’s controlling shareholder, who was critical of financial regulations that he believes show insufficient understanding and support for fintech innovation.
The Ant IPO was to be the largest in history, surpassing that of Saudi Aramco ($25.6 billion when first listed last December), and Ant’s first cousin, Alibaba ($25 billion on its New York Stock Exchange debut in 2014). Based on Ant Group’s IPO prospectus, the company aims to raise $34.4 billion (for about 11% of its shares). With a total market valuation projected at $313.4 billion, Ant would be the third-largest Chinese-listed company and the 12th largest publicly traded company in the world, surpassing JPMorgan Chase.
Will Ant still break the world record if and when its IPO is resumed? If the suspension is accompanied by new regulatory restrictions on its business activities, its market valuation can certainly decline, but Ant has demonstrated creativity and tenacity in its short history. By leveraging the popularity of its digital payment app in China, it has expanded successfully into selling mutual funds, insurance products, and other financial services. Besides the growth potential in each of its current businesses, Ant has other growth opportunities.