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China suspends the debut of Grupo Ant, the largest exit in history

The IPO of the Chinese technology company Ant Group has been suspended this Tuesday after the Shanghai market announced the suspension of its part of the operation, which was to be the largest in history, after a meeting of regulators with executives of the firm and a change in the sector regulations.

In a statement to investors, Ant explains to them that the Shanghai Stock Exchange has notified the suspension of its part of the initial public offering, so the company has decided to do the same with the other party, which was to take place this Thursday on the Hong Kong Stock Exchange.

Although the date for the part of the listing on the Shanghai Stock Exchange had not yet been set, the company planned to do so at the same time as in Hong Kong and, in fact, last week it was already immersed in the preparations for a ceremony to commemorate the occasion, which suggests they weren’t expecting a turn of events like this.

Last night, the China Securities Market Regulatory Commission (CSRC) announced that it had summoned the majority shareholder of Ant, Jack Ma, and two other senior executives of the company to a “regulatory interview” of which details have not yet been revealed and in which the banking regulator, the currency regulator and the central bank also participated.

This surprise meeting caused fears among investors interested in Ant that the Chinese government, which in recent times has expressed its intention to regulate the ‘fintech’ sector, may choose to increase its supervision of the company, operator of the main platform electronic payments company, Alipay, also dedicated to other sectors such as credit and insurance.

Ant had limited himself to explaining that in the aforementioned interview “points of view were exchanged on the health and stability of the financial sector”, and to show his commitment to “fully implement the opinions” of that meeting.

‘Punishment’ for Jack Ma

Although at no time has this been officially pointed to as the reason, Ma, founder and former president of the e-commerce giant Alibaba -Ant’s parent-, raised controversy at the end of last month for statements in which he criticized the financial bureaucracy in the Asian giant.

During a high-level forum in Shanghai, the businessman doubted that what the Chinese financial system needs is to submit to banking regulations for risk supervision such as the Basel Accords, which he described as the work of “an old man’s club.”

While Beijing has insisted in recent months on minimizing risks in the financial sector, Ma questioned the strategy by ensuring that “innovation always comes with risks” and that “the greatest risk is when you try to minimize risk to zero “.

The richest man in China also fired at traditional banks, which he claimed to be run as “pawnshops”, and defended the need for alternative financing channels such as those offered on Alipay with a metaphor: “Big banks are like rivers, but we need ponds, streams and canals in the system. Without them, there will always be floods or droughts everywhere.”

What is the Ant Group?

In the statement announcing the decision to suspend the IPO, the Shanghai park operator alluded to the interview with Ant executives and to this new regulation and assured that they can make the company “not comply with the conditions of issue (of shares) or the information disclosure requirements “.

Ant, who offered “sincere apologies” to investors who chose to take over their securities, replied: “We will stay in close communication with the Shanghai Stock Exchange and relevant regulators.. We will await your news regarding the next developments in our bidding and listing process and will make them public in a timely manner. “

“We will properly manage the issues that continue in accordance with the regulations of both stock markets,” added the company.

Ant had attracted inordinate interest from investors upon his IPO, in which he sought to obtain a few $ 34.5 billion (29,616 million euros) which could have risen to more than 39,590 million dollars (33,985 million euros) if the share over-allotment option was exercised.

The price per share set by the ‘fintech’ for its simultaneous IPO in the Hong Kong and Shanghai parks placed its valuation at more than 313,000 million dollars (268,690 million euros).

After hearing the news, the shares of its parent company, Alibaba, in New York – where it is also listed – fell by about 6%.

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