>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Ant Group’s record initial public offering in Shanghai and Hong Kong has been suspended, the Shanghai and Hong Kong stock exchanges announce late Tuesday.
The announcement came after Ant Group’s top executives were summoned in a rare joint meeting with China’s top financial regulators on Monday. On Tuesday, the Shanghai Stock Exchange referred to that meeting in explaining why it has suspended the fintech giant’s A-share listing.
Ant has recently reported to China’s securities regulator about the significant changes in the regulatory environment, the exchange said, and the major development might make Ant fall short of the listing requirement on information disclosure, adding that it will keep communicating with Ant and its sponsors.
As a result, the exchange decided to suspend the company’s listing on the Science and Technology Innovation Board, also known as the STAR Market — China’s version of the tech-heavy Nasdaq.
Shortly after, Ant Group said the listing of the Hong Kong shares will also be suspended.
Ant Group was gearing up to raise just under $34.5 billion in what would have been the world’s biggest initial public listing and the company is set to debut on Shanghai and Hong Kong on Thursday.
On Monday, the People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC) as well as the China Banking and Insurance Regulatory Commission and forex regulator held the talks with Ant’s controlling shareholder Ma, its executive chairman Eric Jing and chief executive Simon Hu, according to a statement released by CSRC, which did not provide further details.
Later on the day, an Ant spokeswoman said the company would “implement the meeting opinions in depth” and continue to follow the guidelines to improve the capabilities of inclusive service.
In a statement, an Alibaba spokesperson said the company would support Ant Group through the regulatory hurdles.
“We will be proactive in supporting Ant Group to adapt to and embrace the evolving regulatory framework,” the spokesperson said. “We have full confidence in Ant Group colleagues’ ability to do a good job. Society has high expectations for Alibaba. We will continue to work hard to not only meet but exceed expectations and fulfill our responsibility to society.
Ant Group, which spans payments, lending, asset management and insurance, was told it will be treated as a financial holding company and subject to regulations regarding capital and leverage similar to banks, according to people familiar with the matter.
According to a Reuters’ report on Tuesday, China’s top financial regulators have told Ant Group’s top executives in the meeting on Monday that the company’s online lending business will face tighter government scrutiny.
They were informed that Ant will face tougher scrutiny over matters including capital adequacy and leverage ratios, according to the report.
The move comes as some of the regulators were “surprised” by Ant’s business and financial figures, including the scale and profitability of its credit business, details of which were disclosed for the first time in its IPO prospectus in late August, according to the report.