MarketsNov 5, 2020
Ant Group was about to become the largest IPO in the world — until they pissed off the wrong people
Fintech Friction
Victor Lei
Discover
Make friends, not enemies — someone should have told this to Jack Ma, the co-founder of Alibaba and Ant Group, before he decided to start a fight with the wrong people.
On Nov. 3, Chinese regulators put a stop to Ant Group’s $37b+ IPO, just days before listing on the Asian stock exchanges.
What’s the fastest way to stand out as a foreigner? Using cash in China…
In 2020, over 1b people in China used Ant Group’s Alipay app as a digital wallet for transferring money, in-store payment or online shopping. In 2011, Alipay, which used to be a part of Alibaba, was spun out into its own company — Ant Group.
Over the years, Ant Group has grown into one of the largest and profitable payment companies in China. Ant’s record IPO would have valued it at over $200b, putting it in the ranks of Mastercard and Visa.
Mobile payments is a big deal in China. And now, the company that controls 55.4% of the Chinese mobile payments market is about to go public… Or so it thought.
On Nov. 3, the Shanghai Stock Exchange halted Ant Group’s IPO, saying that the company no longer meets stock listing requirements.
Jack Ma may have rubbed off the wrong people at a financial summit in Oct. — by criticizing the current rules governing financial institutions. There, Ma had also reportedly taken a jab at the state-owned, politically connected, Chinese banks for being run with a “pawn-shop” mentality.
For investors outside of Asia, you may not have easy access to Ant Group, who would have been listed on the Shanghai and Hong Kong stock exchange. Instead Alibaba, who also trades on the New York Stock Exchange, is one of your best bets to getting exposure to Ant.
Alibaba owns ~33% of Ant Group, which gives it a big incentive to see Ant succeed — however, Alibaba’s stock fell over 7% after the news.
For now, Ant Group’s record IPO will be put on hold — leaving investors that have committed over $37b, in limbo.
(Learn more: Alibaba, the Amazon of China, wants to become China’s largest online grocer)
