Big Panda China squishes Ant Group: Beijing suspends world's largest-ever IPO in fintech regulatory brouhaha

That or Jack Ma mouthing off about the nation's financial watchdogs


The Chinese government on Tuesday halted Ant Group's $35bn stock-market debut, which would have been the world's largest-ever IPO had it happened. The move is being interpreted as Beijing punishing one of the planet's richest men, Jack Ma, for earlier running his mouth.

The fintech company is backed by Ma, and is an affiliate of the monster Chinese e-commerce company Alibaba, also founded by the billionaire. Ant Group operates, among other things, digital payment platform Alipay, which is used by one billion users and 80 million sellers, largely in China. It is valued at over $300bn.

However, just two days before Ant Group was due to go public, the Chinese financial regulator summoned Ma and Ant Group’s top executives to a meeting, and shortly after the Shanghai Stock Exchange announced the IPO had been suspended.

The exchange put out a statement in which it referenced the meeting and “material matters including a change in the regulatory environment on financial technology” as justification for cancelling the launch. That change in regulations, proposed on Monday, tightens the rules on and scrutiny of financial institutions that provide small loans to people, something Ant Group's platforms specialize in among other services. Presumably, Ant Group wasn't able to meet these latest requirements, and Beijing, allergic to loosely regulated upstart financial platforms, pulled the trigger.

Trying to catch money in a net

Alibaba's financial arm, Ant, files for monster IPO ahead of march on the world's merchants and shoppers

READ MORE

Ant quickly signaled agreement: "Ant Group was notified by the Shanghai Stock Exchange today that our A share listing plan on the Shanghai Stock Exchange would be suspended. Consequently, Ant has decided that the concurrent H share listing plan on the Hong Kong Stock Exchange shall also be suspended," it said.

"Ant Group sincerely apologizes to you for any inconvenience caused by this development. We will properly handle the follow-up matters in accordance with applicable regulations of the two stock exchanges."

However, the real reason for the IPO cancellation is thought to be displeasure within the Chinese government regarding comments Ma made last week at a public meeting where he complained that the regulatory system was stifling innovation and needed to be reformed. Chinese money watchdogs were also at the meeting. Ma also criticized the powerful group of global banking regulators, called the Basel Committee, as “an old man’s club.”

Tech platform or bank?

Ma has long argued that the Ant Group should be treated more as a technology company than a financial institution and has rejected the idea that financial regulations should be applied to Ant’s collection of er, financial services.

The success of Ant Group has been in large part thanks to the lack of constraints on its business. It operates as a tech platform and is focused on making it easy for both lenders and borrowers to use its system. It passes on lending agreements to banks to underwrite, taking a fee from the lenders for the process.

But regulators have grown increasingly concerned that the system might be unstable, especially with the impact of COVID-19 on the economy causing more borrowers to default on their loans. Observers are united in their belief that the suspension was a last-minute powerplay by the Communist government to remind Jack Ma who was in charge. ®


Other stories you might like

  • Experts: AI should be recognized as inventors in patent law
    Plus: Police release deepfake of murdered teen in cold case, and more

    In-brief Governments around the world should pass intellectual property laws that grant rights to AI systems, two academics at the University of New South Wales in Australia argued.

    Alexandra George, and Toby Walsh, professors of law and AI, respectively, believe failing to recognize machines as inventors could have long-lasting impacts on economies and societies. 

    "If courts and governments decide that AI-made inventions cannot be patented, the implications could be huge," they wrote in a comment article published in Nature. "Funders and businesses would be less incentivized to pursue useful research using AI inventors when a return on their investment could be limited. Society could miss out on the development of worthwhile and life-saving inventions."

    Continue reading
  • Declassified and released: More secret files on US govt's emergency doomsday powers
    Nuke incoming? Quick break out the plans for rationing, censorship, property seizures, and more

    More papers describing the orders and messages the US President can issue in the event of apocalyptic crises, such as a devastating nuclear attack, have been declassified and released for all to see.

    These government files are part of a larger collection of records that discuss the nature, reach, and use of secret Presidential Emergency Action Documents: these are executive orders, announcements, and statements to Congress that are all ready to sign and send out as soon as a doomsday scenario occurs. PEADs are supposed to give America's commander-in-chief immediate extraordinary powers to overcome extraordinary events.

    PEADs have never been declassified or revealed before. They remain hush-hush, and their exact details are not publicly known.

    Continue reading
  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading

Biting the hand that feeds IT © 1998–2022