China forces billionaire Jack Ma to suspend £ 26 billion rollout for Ant Group as Beijing tries to keep a grip on the financial technology sector
- The company has suspended its record-breaking listing in both Shanghai and Hong Kong
- Regulators ordered it to be postponed amid fears it would not meet requirements
- Ant Group's Alipay has revolutionized the way apps are used to pay for goods
China has forced billionaire Jack Ma to suspend an IPO of £ 26 billion for the Ant Group as Beijing tries to keep the financial technology sector under control.
The company has dropped its record listing in Shanghai and Hong Kong, which was originally scheduled for this week, the company said on Tuesday.
Chinese regulators ordered the postponement due to concerns that listing requirements would not be met.
Ant Group's Alipay platform has helped revolutionize commerce and personal finance in China. Consumers are using the smartphone app to pay for everything from meals to groceries to travel tickets.
However, the company, which has more than 700 million monthly active users, has also raised concerns in China's state-controlled financial sector by venturing into personal and consumer credit, asset management and insurance.
China has forced billionaire Jack Ma (pictured) to suspend an IPO of £ 26 billion for Ant Group as Beijing tries to keep the financial technology sector under control
The Shanghai Stock Exchange issued the surprise order due to "important issues such as changes in the regulatory environment for financial technologies," said the stock exchange in a separate statement.
The announcement of a shock caused New York-listed shares of affiliated e-commerce titan Alibaba to fall as much as nine percent as U.S. markets opened earlier today.
The suspension comes after co-founder Jack Ma, Ant Group chairman Eric Jing, and CEO Simon Hu were invited to an unusual meeting with regulators on Monday.
In the meantime, state media have recently issued warnings of potential financial instability that could result from the Ant Group's rapid growth.
It also follows new government regulations enacted to contain potential risks in China's growing online lending industry, which Ant Group has been aggressively moving into.
According to Brock Silvers, chief investment officer at Kaiyuan Capital, China's regulators are trying to "maintain control over a financial technology sector that is already huge, profitable and rapidly developing."
The state media recently warned of potential financial instability that could result from the Ant Group's rapid growth
Ma, one of China's richest and most powerful business figures and the majority shareholder in Ant Group, was criticized by state media in late October for comments boasting the size of the IPO and appearing to criticize regulators for stifling financial technology innovation .
A Sunday comment on the government-controlled financial news warned of internet giants like Ant Group, saying that the resulting system problems "lead to serious contagion."
The state-run business newspaper Economic Daily responded to the suspension on Tuesday, demonstrating the regulators' determination to protect the interests of investors.
"Those who try to undermine the existing system will certainly violate the vested interests, just as taxi drivers dislike Uber," said Ivan Li, investment research director of CSL Securities in Hong Kong.
Ant said in a separate social media post on Tuesday that it "sincerely apologizes … for the inconvenience caused by this development," adding that it would work with regulators.
The stock sale was expected to top $ 29 billion (£ 22.2 billion) posted by former record holder Saudi Aramco last December.
The Hong Kong Stock Exchange said Tuesday it had been notified of the suspension by Ant but would not comment on any specific listings.
Beijing has urged national tech flagships to list on domestic stock exchanges instead of fundraising in the US at a time of fierce economic and political rivalry.
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