When Ant Group, which belonged to billionaire Jack Ma, got the nod of approval from Chinese authorities to raise 10.5 billion Yuan ($1.5 billion) for its consumer finance unit (Totalling to 18.5 billion Yuan), spectators and investors became progressively excited to see what the fintech giant has in store for us in the near and far future. Nevertheless, with its owner now giving up control over the Hangzhou-based group as reported earlier this year, things may be taking another turn after the company is nearing its two years of restructuring due to a suspension by the Chinese regulators.
The reason behind such an unclarity of Ant’s future is largely due to the rules in the country that prevent companies from listing domestically in the A-share market if a change of control in the past three years has happened. Similar regulations have been observed in Shanghai’s STAR market as well as Hong Kong’s stock exchange, with a waiting period of two years and one year respectively.
Nothing on IPO Reboot Yet
In relation to this matter, Ant Group said in an emailed statement to Reuters that its management currently has no plans on initiating its initial public offering (IPO) arrangement again, two years after the suspension. Besides, the fintech giant mentioned that Ma, who now only holds 6.2% of voting rights after the series of adjustments and power shifts (He once held 34 percent of the company’s shares), has no control of the group and Ant will be focusing on optimisation and rectification before any major movements can take place. The statement read, “Ant Group has been focusing on its business rectification and optimisation, and does not have a plan for an IPO.”
Knowing the first time Ant Group was planning its IPO, a world’s largest sum of $37 billion was initially raised for the plan before its last-minute cancellation by the Chinese authorities. Its ripple effects were enormous because the huge amount of money would have taken the market by storm and its suspension made all global capital markets feel its shock waves.
What Say Regulators?
Multiple sources gave a different tendency about how the Chinese personnel’s attitude sways on the Ant Group situation. Considering that the group, which was founded eight years ago by Ma, had been given a temporary green light to resume its IPO in both Shanghai and Hong Kong, situations became much more optimistic than they were. Furthermore, after the group was given the accepted request to expand its capital, it invested 9.25 billion Yuan in its Chongqing consumer finance unit that will amount to a 50% stake, involving partners namely Nanyang Commercial Bank, Sunny Optical Technology Group Co Ltd and Hangzhou-based Transfar Zhilian Co Ltd. in the deal. Having said that, the China Securities Regulatory Commission (CSRC) has reiterated that any forms of listing on an eligible platform are welcomed both in China as well as overseas.
What’s Next for Ant?
Ant had fetched a whooping valuation of $280 billion (Assessed based on stock pricing) when they wanted to go ahead with its IPO plan, but the series of events happened in the past two years dampened its worth drastically, with a little fraction or portion left at the moment. Hence, one can hardly imagine if Ant is not going to make any changes as soon as it can or be given the opportunity to do so as any prolonged drama than what they are undergoing now is not helping the case for IPO at all.
In light of the above, chairman Eric Jing had assured its investors, both existing and potential ones, that the group will eventually go public regardless of what had occurred in the last few years.