Ant IPO halted as ‘major issues’ emerge, Alibaba share price crashes
Even though the Ant Group IPO has been postponed, according to one IG Analyst, the company’s ‘growth prospects remain positive.’
Ant IPO postponed as ‘major issues’ emerge
In a shock revelation, the Ant Group IPO has been postponed, with reports coming in that the public offering may be delayed by up to half a year, according to QQ.com.
Ant was set to dual-list in Hong Kong and Shanghai – in an IPO which was poised to be the largest in history, surpassing even the $29 billion share offering from Saudi Aramco in 2019.
Ant Group, which was aiming to raise close to $35 billion as part of the much-hyped IPO, saw retail bids totalling $3 trillion pour in by the end of October. According to Reuters, retail bids for the Shanghai portion of the IPO came in at a staggering $2.8 trillion – leaving that leg of the IPO 872 times oversubscribed. The Hong Kong portion, by comparison, was 389 times oversubscribed by retail investors – with bids totalling $168 billion.
Regulators step in
Regulators paid little heed to the fervent demand for Ant’s stock, with the Shanghai Stock Exchange on November 3 announcing that the Ant Group IPO would be postponed, due to changes in the regulatory environment.
This comes after Chinese regulators met with a number of key Ant Group executives – including Jack Ma, China’s richest man.
As the Shanghai Exchange wrote in an announcement, Ant Group:
‘Also reported on major issues such as changes in the financial technology regulatory environment. This major event may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements.’
As a result of these ‘major issues’ the Exchange added that it would be suspending the Ant listing, effective immediately.
In response, Ant Group apologised to its investors, in a WeChat statement saying:
‘We will properly handle the follow-up matters in accordance with applicable regulations of the two stock exchanges.’
‘We will overcome the challenges and live up to the trust on the principles of: stable innovation; embrace of regulation; service to the real economy; and win-win cooperation,’ the company finished.
In a more recent update, QQ.com reports that Ant’s IPO is expected to be delayed for upto six months.
Ant share price: The impact
Ultimately, what the IPO postponement means for Ant’s share price – when and if it lists and both in the short and long-term – remains uncertain.
One immediate impact that came from all of this however, was a pronounced sell-off in Alibaba’s NYSE-listed stock, with the e-commerce giant finishing out Tuesday’s session down 8.10% at $285.57 per share.
Adding to that, Alibaba’s Hong Kong-listed stock plunged 9.27% during the opening hours of the Asian session, falling to HKD$272.00 per share. For reference, Alibaba – which was co-founded by Jack Ma, owns a 33% stake in Ant Group.
Commenting on the outlook for Ant Group, IG Market Analyst, Reo Liao said:
‘Overall, Ant Group's growth prospects remain positive, largely because its CreditTech sector is set to become the new engine to drive revenue growth; while the loan balance is expected to surge again if Alibaba can enter higher-end consumer discretionary sectors focusing on products such as Jewelleries and watches.’
Elsewhere, speaking to the long term outlook and in response to these latest developments, Bernstein analyst Kevin Kwek, in a research note to clients, wrote:
‘Most investors will remain optimistic on Ant's positive long term prospects. Investors might nevertheless revisit their assumptions of growth given the clear signs of regulatory intervention.’
Institutional investors had previously put bids in of 68 to 69 yuan per share for the Shanghai portion of the Ant IPO.
Regardless of this postponement, you’ll be able to take a position on day one of Ant’s Hong Kong listing with IG via CFDs.
Want to trade Ant Group's IPO? Open an account to get started as soon as Ant Group lists.
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