SHANGHAI (Forsige) – On Tuesday, China suspended the $37 billion Ant Group listing, thwarting the world’s biggest stock market launch with just days to go in a dramatic blow to the financial technology business created by billionaire Jack Ma.
The Shanghai stock exchange said it suspended the initial public offering ( IPO) of the company on its tech-focused STAR Market, leading Ant 6688.HK688688.SS to freeze its dual listing scheduled for Thursday also on the Hong Kong leg.
This followed a meeting on Monday with China’s financial regulators during which Ma and his top executives were told that the lucrative online lending company of Ant would face tighter scrutiny, sources told Reuters.
The Shanghai Bourse described Ant’s meeting with financial regulators as a “significant event” that disqualified Ant from listing, along with a tougher regulatory climate.
For Ma, who had wanted Ant to be viewed as a technology company rather than a highly regulated financial institution, analysts interpreted the move as a slap down.
“The Communist Party has shown the tycoons who’s boss. Jack Ma might be the richest man in the world but that doesn’t mean a thing. This has gone from the deal of the century to the shock of the century,” Francis Lun, CEO of GEO Securities, said.
In order to restore its listing, Ant is trying to decide if it needs to reveal more detail about its relationship with regulators to the Shanghai exchange, or whether the stock market wants it to fix all its problems with the regulators, which would take much longer, said an individual with knowledge of the matter.
At an event last month attended by Chinese regulators, Ma said innovation was stifled by the financial and regulatory system and must be revamped to boost growth. He also likened the Basel Committee of worldwide banking regulators to “the club of an old man.”
The individual said that Ant believes that public scrutiny put Ma in the crosshairs of regulators.
The suspension was reverberating through markets. In early U.S. trading, Alibaba Group Holding 9988.HKBABA.N, which owns around a third of Ant, dropped 9 percent, wiping almost $76 billion off its value, more than double the sum that Ant expected to earn.
“This is a curveball that has been thrown at us … I don’t know what to say,’ one banker who works at the IPO said.