In early Nov. 2020, the Chinese government cited antitrust regulations when they halted an IPO that was set to break records. With a projected valuation of $37 billion, Ant Group Co. (formerly Ant Financial) froze in its tracks, but not by its own accord. With no resolution in sight, the Ant Group IPO might be holding its horses for a good, long while.
Jack Ma is the founder of the fintech company as well as e-commerce brand Alibaba, China's most robust corporation. Will the IPO be able to push through monopolistic concerns and come to light?
Jack Ma goes quiet after China's slap, but reappears confidently
On Wednesday, Jan. 20—nearly three months after the Ant Group IPO was suspended—Ma returned to public view. Alibaba Group Holdings stock ("BABA" on the NYSE) rose 6.32 percent in response. This rise represents a marginal but likely temporary declaration from investors, especially given Alibaba's own antitrust concerns and its stock's recent fall of 28.58 percent.
Right now, an investment in the Ant Group IPO is still very risky given the uncertain regulatory circumstances surrounding the company.
The details on why China suspended the Ant Financial IPO
China is currently focused on non-bank payment facilitator AliPay, an Ant Group offering. On Jan. 20, the state council proposed a draft suggesting that the Peoples Bank of China (PBOC) help regulate antitrust situations in favor of the payment market.
China did more than just launch an antitrust investigation into AliPay. The government actually called for Ma to rehaul how Ant Group functions as a whole. One proposed solution to limit a single corporation's power is by setting limits like the following:
- One-third of the market share for the non-bank payments industry as a single company, or one-half for two companies working together.
- Half of the market share for electronic payments (including online and mobile banking).
- Compliance with existing anti-laundering and anti-terrorism requirements.
With all of these developments, it seems like China is using Ant Group as a vehicle for some serious regulatory change.
Jack Ma is Ant Financial's founder, which puts him at the center of the controversy
According to Forbes, Ma's net worth has decreased by 3.7 percent since Nov. 2020. The Ant Group IPO was set to project his wealth far beyond its already extraordinary level. With $62.1 billion to his name as of Jan. 21, 2021, Ma is anything but down and out, but the presumably temporary collapse of the Ant Group IPO could weigh on Ma for a long time.
When will the Ant Financial IPO be back?
In late Nov. 2020, Business Insider reported that an Ant Group IPO likely won't be happening in 2021. Now that we're one month into the year, it's becoming clearer just how much of an overhaul Ma must make for his business to meet the Chinese government's standards.
Investors, is an Ant Financial IPO position worth it?
The Ant Group IPO date is still nowhere to be found. While Ma offered Alibaba stock on the NYSE, he wanted to take a different route with Ant Group by placing its stock on a Chinese exchange. It's unclear whether he'll stick to that plan once (and if) China lets him move forward. Right now, you may want to focus on pretty much anything other than an Ant Group IPO trade.