The largest IPO of history was set to launch on Thursday in both cities. The news of suspension came a day after the founder, Jack Ma, along with executive chairman Eric Jing and CEO, Simon Hu, was called in for an interview by the People’s Bank of China and other banking, securities, and foreign exchange regulators of China.
The Shanghai stock exchange revealed that Ma was summoned for a “supervisory interview” along with other major issues that included the financial technology regulatory environment.
“This material event may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements,” the exchange said.
The exchange delayed the listing of Ant for an indefinite period and asked the company to make a public announcement about the suspension. Ahead of the suspension on the Shanghai exchange, Ant suspended the listing of the Hong Kong shares as well.
Following the unexpected news, stocks of Alibaba, which has around 33% stake in Ant Group, fell more than 5% in U.S premarket trading.
During the financial summit at the end of October in Shanghai, Ma had criticized the banking environment in China, suggesting that the big banks had a “pawnshop mentality”. He pointed out that Ant aimed to enable access to financial services across smaller companies and individuals who don’t have much collateral.
On the other hand, an official at the banking regulator, Guo Wuping, criticized fintech companies for tempting young people and low-income groups into overspending leading them to “debt traps”. He said that greater regulation of Ant and other fintech companies needed to be done, pointing out that they charge higher fees as compared to credit cards issued by banks.
Another hurdle came in for Ant Group in the form of a draft of new regulations on online lending, jointly released by PBoC and China’s banking regulator. According to the regulations, Ant will have to cap loans at either Rmb 300,000 ($44,843) or one-third of a borrower’s annual pay – whichever is less.
With the new set of regulations, it might get even harder to issue loans and Ant’s performance will be affected further.