Investors are still trying to parse the fallout from the recent decision to pull the blockbuster initial public offering of Ant Group.To get more ant group ipo news, you can visit shine news official website.
China’s biggest financial technology group had been set to raise US$37 billion in the world’s largest IPO before Beijing’s intervention this month.Now China watchers are looking at what the far-reaching ripple effects will be of the unanticipated policy move – and its future victims and beneficiaries.
The official decision was part of a growing initiative to rein in all micro lenders with proposed new rules that require Internet platforms to provide more of their own funding for the loans they arrange.
Second, it clearly was a response to Ant’s size, which potentially poses systemic risk, whether in digital payments, lending or wealth management.
And finally, some believe Jack Ma, Alibaba’s founder and Ant’s controlling shareholder, had become too visible and too wealthy in the eyes of the party.It is easy to reach the pessimistic conclusion that Beijing is signalling its determination to “turn the clock back”, said one prominent Hong Kong-based fintech investor who is close to Alibaba.
“Beijing is worried about social stability, and because it doesn’t understand how to regulate these firms, it just decided to close them down. Everyone today is wary. Nobody wants to touch consumer finance and [small and medium-sized enterprise] lending.”
That though, may be too gloomy. A big part of Ant’s problem is more likely that it has the wrong business model at a time of macro uncertainty. Its fast-growing credit platform serves as a high-tech matchmaker between borrowers and banks.
Far better to postpone – or more likely – cancel the listing, than see Ant’s shares plunge in value as the market digests the implication of unfavourable new rules.Consider by way of contrast, Alibaba’s great rival, Tencent. Tencent’s fintech efforts are built around the fully digital WeBank, in which it has a minority stake of under 30 per cent.
“Because we are a licensed bank, everything we do is under the existing regulatory framework,” said Henry Ma, chief information officer at WeBank.
“Regulators do see the benefit to the financial system of fintech, and its emphasis on inclusion. It is when there is a lack of proper oversight that risk is created.”As a bank with its own funds at risk, WeBank has held up well amid the impact of the coronavirus crisis. That is in part due to its strategy of lending only small amounts, Mr Ma said.
“The size of the loans is the determining factor,” he added.
“When the size of the loan is under 200,000 yuan (US$30,350) – or as small as 8,000 yuan – there is less incentive to run away or to speculate. Owners of SMEs treasure their credit record.”