Ant Group and Its IPO Pricing?
Ant Group is basically an extensive payment and micro-lending business that is largely based on big data which deals with an array of financial services. Ant Group is considered to be the world’s highest valued fintech company which is controlled by Jack Ma who owns 50.52% of its shares and has become the most prominent man of China after the Alibaba Group fame.
The motive of Ant Group was to go public and raise the world’s largest IPO of all time with US$37 billion, which makes the valuing of the company between US$350 billion to US$450 billion in October 2020. This IPO was to be traded in the Shanghai and Hongkong Stock Exchange Market, if this got released than it could surpass the record set by Saudi’s Aramco $29.4 billion last December. Ant Group also operates China’s massive e-payment system platform, Alipay which primarily is a payment tool and has also become a major portal for loans, personal credit, insurance and investments that serves over 1 billion users and 80 million merchants. The people were waiting eagerly for Ant IPO to release and make this the deal of the century.
Setback for Ant Group?
The Ant group had a major setback just 48 hours before the highly anticipated IPO was about to be released in the Shanghai and Hongkong Stock Exchanges. The signs of trouble started on November 2 when Jack Ma was ordered to be present with his senior executives by Chinese regulators. This was considered to be a rigid action taken by the officials of the ruling Communist Party of China (CPC) in order to hold this new record venture. This meeting between Ant group and the communist party proved that still Communist party is the boss who rules the tycoons.
Jack Ma had a vision towards Ant Group being treated more as a technology company rather than regulated financial institution. During a public event, Jack Ma even claimed China’s regulations to be outdated and poorly suited to the companies who are trying to use the technology in order to handle financial innovation. Ant group believes that this public comment led towards Jack Ma in crosshairs of the regulators.
After this setback, Ant Group is evidently being asked to simplify on its financial innovations, business model, measures taken to protect the data collected through users data privacy and other issues. This has all led to fall of the listing plan which attracted almost $3 trillion of orders from individual investors for its dual listing in Shanghai and Hongkong. There is a possibility that this financial institution would be asked to restructure its business because of the tighter scrutiny and even restrictions faced on capital and leverage as banks.
Another setback for Ant Group?
The highly predicted Ant Group faces another hurdle as its initial public offer is anticipated to be delayed in 2021 as well because of the mending of rules and regulations of fintech industry by China. Probably, this delay caused analysts to slash its valuation estimate in half which has provided a major blow to investors and investment banks who were assured to benefit from this popular IPO. The regulators of China want Ant Group to obey both the new and proposed rules which are relevant to various sector such as consumer lending. Jack Ma’s Alibaba who owns a third of Ant Group also faced a 5% decline which is the most severe fall since the IPO was released.
The challenge faced by Ant Group is not regarding following the new restrictions, but also certifying that the fintech company could obey with the change in the regulatory environment in China. Ant Group is controlled by a joint task force placed by China and guided by the Financial Stability and Development Committee. The new laws require Ant Group to carry more capital on its balance sheet as it eases the consumer loans.
Ant group would probably need around $12 million in funds in order to reclaim submission with the new rules and regulations. If the fintech company fails to finish the public launch before its IPO filling which ends in October 2021, then the company would need to reinstate the listing process with Shanghai and Hongkong Stock exchanges. So, Ant Group with so much work in hand with the new regulatory framework and some other laws which are not yet clear, it would probably lead the IPO to not take place before 2022.