Ant Group chief chairman Jack Ma was summoned with other executives to meet central bank and regulatory officials. ©AFP/File Philippe LOPEZ
Shanghai (AFP) – China’s Ant Group on Tuesday suspended its record-breaking IPO in both Hong Kong and Shanghai as the fintech giant faces growing pressure from Chinese regulators over potential risks.The firm’s Alipay platform has helped revolutionise commerce and personal finance in China, with consumers using the smartphone app to pay for everything from meals to groceries and travel tickets.

But Ant Group, which has more than 700 million monthly active users, has also caused concern in China’s state-controlled finance sector by venturing into personal and consumer lending, wealth management and insurance.

Ant will suspend both legs of its $34 billion listing — originally set to take place this week — after being ordered by Chinese regulators to postpone its Shanghai offering over concerns it would not meet listing requirements, the company said in a filing Tuesday.

The Shanghai stock exchange issued the order after Ant itself “reported major issues such as changes in the fintech supervisory environment”, the bourse said in a separate statement on the same day.

The move comes after co-founder Jack Ma, Ant Group chairman Eric Jing, and chief executive Simon Hu were summoned to an unusual meeting with regulators on Monday, while state media have recently issued warnings about potential financial instability that could result from Ant Group’s rapid growth.

It also follows new state regulations to contain potential risks in China’s growing online lending industry, a sector Ant Group has aggressively moved into.

– Fintech risks –

China’s regulators are “attempting to maintain control over a fintech sector that is already huge, profitable, and rapidly evolving,” Brock Silvers, chief investment officer at Kaiyuan Capital, told AFP.

“With no established rule book, regulators may have been understandably anxious to get involved.”

Ma, one of China’s richest and most powerful business figures as well as Ant Group’s controlling shareholder, has also faced state media criticism for comments in late October in which he boasted of the size of the IPO and appeared to criticise regulators for stifling fintech innovation.

An earlier Ant Group statement on the meeting with regulators said “views regarding the health and stability of the financial sector were exchanged”, but otherwise gave few details.

A Sunday commentary in the state-controlled Financial News warned of internet giants like Ant Group getting too big, saying any resulting systemic problems “will lead to serious risk contagion”.

Other commentaries have urged tighter regulation of Ant Group’s online lending.

The state-owned Economic Daily newspaper responded Tuesday to the suspension calling it a demonstration of regulators’ determination to “safeguard the interests of investors”.

The share sale was set to beat the $29 billion chalked up by previous record-holder Saudi Aramco last December.

Beijing has called on national flagships of the tech sector to list on domestic stock exchanges rather than fundraise in the US, in a period of sharp economic and political rivalry.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.