Xi Jinping Killed the Ant Financial IPO — Will China Approve It in 2022?

In 2020, Chinese regulators stalled Ant Financial’s IPO, apparently at the behest of the country’s all-powerful President Xi Jinping. What followed was a terrible tech crackdown, which took a toll on Chinese stocks — domestically and globally listed.

Now, the country’s state media has taken a more reconciliatory note and has said that China will end the tech crackdown and also support the overseas listing of Chinese companies. Will China allow Ant Financial’s IPO in 2022?

Ant Financial’s IPO was originally planned for November 2020. It was expected to be the biggest IPO in history and the company intended to raise over $35 billion. The IPO received bids over $3 trillion, which was a reflection of its popularity.

However, China killed the IPO at the last moment. Apart from regulatory concerns, Jack Ma’s outbursts against the country’s regulators didn't help. Ma wasn’t seen in public for months before reappearing in an online video in early 2021.

In February 2021, there were reports that Ant Financial reached a deal with the Chinese central bank and would soon IPO. As part of the deal, the company agreed to transform itself into a financial holding company that would be overseen by the central bank. However, China had different plans. The country went ahead with the tech crackdown, which killed any glimmer of hope for an Ant Financial IPO.

In February 2022, China asked banks to review their exposure to Ant Financial. It was yet another sign that the country’s tech crackdown is far from over.

China’s crackdown has also taken a toll on Ant Financial’s valuations. If the IPO went ahead as planned, Ant Financial would have commanded a valuation higher than JPMorgan Chase, which is the largest U.S. bank. The most recent private market valuation for Ant Financial was $150 billion in a 2018 funding round.

Warburg Pincus valued the company at $220 billion at the end of 2020, which was below the almost $320 billion that it was seeking in the IPO. BlackRock also lowered the company’s valuation to $174 billion. Fidelity had an even bleaker forecast and cut Ant Financial’s valuations to $78 billion.

Bloomberg Intelligence estimated that under the base case, Ant Financial’s valuation would fall to $29 billion. The firm’s bull case valuation of $115 billion was also about a third of the IPO valuation.

There's hope that China might finally allow Ant Financial’s IPO in 2022. While there hasn't been any official confirmation, the country has taken a more reconciliatory tone amid its slowing economy and rapidly rising COVID-19 cases.

Chinese state media has said that the country intends to do an about-turn on its tech crackdown. It also intends to support the overseas listing of Chinese firms, which is in stark contrast to what the country did in 2021. China forced ride-hailing company DiDi to delist from the U.S. within months of its listing.

Even if Ant Financial comes up with the IPO, it might opt for a dual Hong Kong and Shanghai listing as was originally planned. China’s tech crackdown, which reached its epitome with DiDi delisting, has left a permanent scar on investors’ minds. It might not be easy for Chinese companies to access the U.S. IPO market in the foreseeable future.