The IPO has also been suspended in Hong Kong, according to a statement from Ant Group, which referenced the meeting between Ma and Chinese officials as well as “recent changes” in regulations. In a statement on its official WeChat account, Ant Group apologized to investors for “any inconvenience caused by this development.”
This is the first time that Chinese regulators have taken such drastic actions on the eve of a large IPO, senior geotechnology analyst at Eurasia Group Xiaomeng Lu told CNN Business.
“Jack Ma’s aggressive comments last weekend exacerbate the brewing conflict between large Chinese tech companies and powerful regulators,” Lu said in emailed comments. “Ant is likely to adjust its IPO valuation as a result of this intervention and delay its launch date.”
Duncan Clark, the author of “Alibaba: The House that Jack Ma Built” and chairman of investment advisory firm BDA China, said before the IPO was halted that Chinese regulators “want to put out statements that they’re the ones in charge, the ones in control. No regulator anywhere wants to be irrelevant,” he said.
On Monday, the China Banking and Insurance Regulatory Commission — one of the regulators that summoned the Ant executives — proposed new rules for online lenders. The rules could could mean that Ant would have to set aside more cash for the loans it facilitates and would place more credit risk on its balance sheet, according to Bernstein analyst Kevin Kwek.
While it’s not yet clear exactly why the Ant Group IPO was suspended, it could be an attempt by Beijing to remind Ma “who calls the shots,” Clark told CNN Business on Tuesday. Still, such a dramatic move so close to the listing date is surprising because it could damage Beijing’s drive to develop its capital markets, he added.
Ant Group said on Tuesday that it would stay in “close communications” with regulators and the Shanghai exchange.
“We will overcome the challenges and live up to the trust on the principles of: stable innovation; embrace of regulation; service to the real economy; and win-win cooperation,” the company said in its statement. “We will continue to serve small and micro businesses and ordinary citizens with our passion, professionalism and commitment for society.”
— Laura He, Steven Jiang, Hanna Zhang and Shanshan Wang contributed reporting.