Alibaba’s ant group faces regulatory pressure ahead of record IPO

Alibaba’s ant group faces regulatory pressure ahead of record IPO

Fintech giant Ant Group is facing mounting Chinese pressure over potential risks in its online lending business, with co-founder Jack Ma and other executives calling for an unusual meeting with regulators just before its record IPO is this. week.

Signature Alipay The platform has helped revolutionize commerce and personal finance in China, with consumers using the smartphone app to pay for everything from meals to groceries to travel tickets.

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

Regulators and state media have recently issued a series of warnings about possible financial instability that could result from Ant’s rapid growth, suggesting official unrest as the company prepares to list in Shanghai and Hong Kong on Thursday at the largest. history initial public offering.

Ant Group Chairman Eric Jing and CEO Simon Hu were called on Monday to meet with representatives from the central bank, the country’s securities and banking regulators and the foreign exchange watchdog, according to a government statement.

He only said they had “regulatory talks” but described the discussions with a Chinese term used when someone is summoned for a reprimand.

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

It remains to be seen how much of an impact the pressure on equity issuance, which has global investors salivating, can have.

“Regulatory risks are the biggest risk factor for Ant Group,” said Kevin Kwek, an analyst at Sanford C. Bernstein, in a note, according to Bloomberg News.

“We believe that the news will only be increasingly negative for the price and we believe that most investors will remain optimistic about Ant’s long-term positive outlook.”

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

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

“Ant Group is committed to implementing the views of the meeting in depth,” the statement read.

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

Other comments have called for stricter regulation of Ant Group’s online loans.

The sale of shares is forecast to exceed $ 34 billion (approximately Rs. 2.52.7 billion rupees), topping the $ 29 billion (approximately Rs. 2.15,549 million rupees) noted by the previous record holder. Saudi Aramco the last December.

Beijing has asked national flagships of the technology sector to list on national stock exchanges instead of raising funds in the United States, in a period of strong economic and political rivalry.

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