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BEIJING, August 2 (TiPost)— News about Ant Group Co.’s revival of initial public offering (IPO) swirled as Chinese regulatory tightening on tech industry is winding down. The latest news came from a state-run news media outlet.
Credit：Visual China
From what we have learned recently, it’s very unlikely that Ant Group will resume its IPO effort in the near term, reported China News Service, China’s second largest state news agency next to Xinhua News Agency. The reported, citing people close to regulators, noted two considerations that made the news agency drew such conclusion: on the one hand, Ant’s resumption of IPO has to be in accordance with laws and regulations; on the other hand, the business will also make judgments based on conditions inside it and those outside, namely, the market conditions.
Ant Group is mulling a restructuring and to pave way for future Hong Kong IPO, Bloomberg last week quoted sources familiar with the matter. Ant was reported to consider breaking off some of marginal businesses including blockchain, database management services and international business, which is set to be useful for its application for a financial holding license in China, and once obtaining the license, the fintech company can prepare for an independent Hong Kong listing, rather than a dual listing it originally pursued more than two year ago. Bloomberg sources also said Ant has relayed its plan to some shareholders thought the plan still could change since Ant has not been finalized.
Ant Group didn’t comment on the Bloomberg report. China News Agency said it had requested Ant for confirmation of the reported restructuring, but has not received any response yet. The news agency noted some market participants believed the recent regulatory penalty will help Ant improve corporate governance, strengthen risk management, and enhance its overall business compliance, accordingly, the process of applications for business licenses such as the financial holding license and the credit reporting license could accelerate.
Ant Group was scheduled to list in Shanghai and Hong Kong on November 5, 2020 and raise more than $34 billion through its record-breaking IPO. The blockbuster offering was suddenly halted prior to the dual listing. The Alibaba affiliate had carried out rectifications on its key businesses in response to regulatory requirements since late 2021 Earlier July, Chinese regulators wrapped up its rectification since late 2021 with billions of dollars in penalties. The China Securities Regulatory Commission (CSRC) said Ant was fined RMB7.123 billion (US$984 million) for violations regarding corporate governance, consumer protection, banking and many other fields. The top securities regulator also said most of outstanding issues in the financial business of Ant have been addressed at the moment, so authorities now shift regulatory focus to regularized supervision.
A day after CSRC’s announcement, Ant Group unveiled its proposal to buy back as much as 7.6% of shares. Any repurchased shares are planned to be transferred into its equity incentive pool. The program was deemed as a way to provide existing investors a way to exit or get some money back. It would cost Ant up to RMB43 billion and value the company at RMB567.1 billion (US78.5 billion), dropping about 40% from the post-money valuation in 2018. The Series C funding round in June 2018 brought Ant’s valuation to US$14 billion. At a meeting held on July 23, shareholders approved Ant Group’s proposal to repurchase up to 7.6% of its equity interest, and Alibaba, as a shareholder that holds a 33% stakes in, decided not to join in the repurchase program. Alibaba said its decision was made to maintain its holdings of Ant as the affiliate continues to be a key strategic partner of the Chinese e-commerce giant’s several businesses.