HERO TO ZERO IN 3 DAYS By: Vadiraj

How does it feel when you invest your hard-earned money into the stock market but the very next day you lose your savings? From becoming a hero to your family, you become a zero. Same with Jack Ma as ANT Group’s IPO dual listing at Shanghai and Hong Kong got suspended last week. What about the $34 billion proceeds to be raised through IPO, making it the largest stock debut; all in vain just because of one speech that cost them heavily as it sent wrong signals. Else it could have beaten the current largest stock debut of oil titan Saudi Aramco’s $29.4 billion.

The fintech arm of Alibaba, ANT Group provides financial services and payment services. A total of 700 million monthly users are benefited from using this service. ANT Group provides loans to consumers and small businesses who are unable to fetch loans from China’s largest banks as they do not qualify the requirements. As of June, its digital payments in China account for $17 trillion taking its revenue to $18 billion and profits to $2.7 billion. The orders attracted by the individual investors which were enough to buy global MNCs like J.P. Morgan Chase & Co. could have shaped the future of global finance.

Where did it go wrong?

In October, the comments from Jack Ma about the financial regulations of China being outdated irked top leaders and also commented that it badly suits those companies who want to make use of technology to bring innovation in financials. The banks tieing up with the microlenders such as Alipay shows greater concern to the Chinese government. The Shanghai listing was suspended which prompted the Hong Kong Stock Exchange to make the same move. This move was done after the meeting between Jack Ma and the financial regulators. The reason for the suspension was the qualifications for the stock debut were not met. ANT Group’s online lending business does not match the requirements, it is a concern for the regulators it could face scrutiny. Significant changes had been made in the financial regulations related to the online lending business.

Before the statement coming from Jack Ma criticizing the policymakers’ regulations, the IPO was approved but after that, it was reversed. This goes to show that in China whoever you are and whatever business you do the ultimate boss is the Government. Even more so for the third parties venturing into the consumer lending business, this makes it uncomfortable for the regulators and the government.

Just think what if this IPO was successful’ it could have boosted the confidence of other entrepreneurs in the Chinese industry to not depend on the foreign capital markets for financing. The suspension cost them around $76 billion in valuation.

So, what’s next?

ANT Group needs to work on its operations of micro-lending business, work as per the new updates from the policymakers to make it qualify for IPO in the future. Now they need to change their working practices to satisfy the regulators and also to be more transparent in its disclosure of the information.

A wounded lion is more dangerous as it will retaliate, so what you think- will the ANT Group be able to make a comeback in near future? Will it be the largest stock market debut?