China suspends Ant Group’s Shanghai IPO

The preliminary trading suggests investors aren’t put off by a warning from China’s regulators that Ma’s firm faces increased scrutiny


HONG KONG • China has suspended the Shanghai leg of Ant Group Co Ltd’s US$35 billion (RM145.45 billion) offering, potentially derailing the world’s biggest IPO.

The Shanghai stock exchange will suspend the listing amid changes in the regulatory environment, it said in a statement yesterday without providing further details. The debut was expected tomorrow, the same day as the Hong Kong portion.

The shock move comes after China’s regulators warned that Jack Ma’s (picture) firm faces increased scrutiny and will be subjected to the same restrictions on capital and leverage as banks.

Ma, Ant’s billionaire co-founder, was summoned to a rare joint meeting on Monday with the country’s central bank and three other top financial regulators.

Ant’s decision to list on the Star board, a market launched in Shanghai last year, was seen as a major win for mainland exchanges.

The IPO had sparked a frenzy among individual investors, with about US$2.8 trillion worth of subscriptions for the Shanghai leg alone.

In the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, more than 284 times the initial offering tranche.

The rare move by China’s top regulators to rein in on Ant’s expansion plans hasn’t curbed interest in the stock, which continues to trade at a 50% premium ahead of its debut.

Institutional investors bought shares at about HK$120 (RM72) apiece in grey-market trading for a second day yesterday, compared to the listing price of HK$80, according to people familiar with the transactions.

They declined to be identified discussing private matters.

Anticipated Debut

Ant’s IPO is the most anticipated in years, attracting at least US$3 trillion in orders for its dual listing in Hong Kong and Shanghai.

The stampede for shares is fuelling predictions of a first-day pop, even as sceptics warn of risks including the US elections, tightening regulations in China and rising Covid-19 infections worldwide.

“It’s pretty extraordinary given the backdrop and it shows you how much Asia is decoupling from the US,” said Gary Dugan, CEO of the Global CIO Office in Singapore, which didn’t take part in the IPO.

In a so-called grey market, investors can bid for new shares before they officially start trading on a stock exchange.

The over-the-counter mechanism is often seen as an early indicator of investor demand for an IPO.

Individual buyers will be able to trade through a similar channel today in Hong Kong.

Ant Rules

The fintech company’s US$34.5 billion IPO gives it a market value of about US$315 billion based on filings, bigger than JPMorgan Chase & Co and four times larger than Goldman Sachs Group Inc.

The sale vaults Ma’s fortune to US$71.6 billion, topping the Walmart Inc heirs.

The IPO surpasses Saudi Aramco’s record US$29 billion sale last year and the US$25 billion raised by Ma’s Alibaba Group Holding Ltd in 2014.

Ant priced its Shanghai stock at 68.8 yuan (RM41.28) apiece. The company may raise another US$5.17 billion if it exercises the option to sell additional shares to meet demand, known as the greenshoe.

Elderly Club

Ant has faced censure in Chinese state media in recent days after Ma criticised local and global regulators for stifling innovation and not paying sufficient heed to development and opportunities for the young. At a Shanghai conference late last month, he compared the Basel Accords, which set out capital requirements for banks, to a club for the elderly.

“Good innovation is not afraid of regulation, but is afraid of outdated regulation,” Ma said. “We shouldn’t use the way to manage a train station to regulate an airport, neither should we regulate the future with the method from yesterday.”

Ant said in a statement late on Monday it will “implement the meeting opinions in depth” and follow guidelines including stable innovation, an embrace of supervision and service to the real economy. — Bloomberg