Shares in Alibaba Group Holding, founded by Chinese billionaire Jack Ma, dropped almost 9 per cent on Tuesday, after Ant Group’s mega $37-billion listing was suspended in both Shanghai and Hong Kong. The suspension of the fintech company’s IPO is a major setback just two days before what was set to be the world’s largest-ever stock market debut. The Alibaba stock slumped as much as 8.97 per cent to $284 at the lowest level recorded in early deals on the New York Stock Exchange.
The Shanghai stock exchange first announced that it had suspended the IPO of Ant – also founded by Jack Ma – on its STAR market, prompting Ant to also freeze the Hong Kong leg of the dual listing.
Ant said that its listing had been suspended by Shanghai following a recent interview regulators held with its founder Jack Ma and top executives. It said it may not meet listing qualifications or disclosure requirements, and also cited recent changes in the fintech regulatory environment.
Ant was set to go public in Hong Kong and Shanghai on Thursday after raising about $37 billion, including the green-shoe option of the domestic leg, in a record public sale of shares.
Regulators had summoned Mr Ma, Ant’s executive chairman Eric Jing, and chief executive Simon Hu, to a meeting on Monday when they were told the company’s lucrative online lending business faced tighter government scrutiny, news agency Reuters reported citing sources.
The meeting came as Chinese authorities published new draft rules for online micro-lending.
At the end of October, Mr Ma had called financial regulation outdated and badly suited to companies trying to use technology to drive financial innovation.
But Beijing has become more uncomfortable with banks heavily using micro-lenders or third-party technology platforms like Ant for underwriting consumer loans, amid fears of rising defaults and deteriorating asset quality in a pandemic-hit economy.