NAfter a warning shot last week, the signs between China’s stock exchange regulator and the fintech company Ant Financial from Hangzhou are pointing to relaxation again. The company, which once emerged from Alibaba and is still controlled by its founder Jack, is allowed to continue with plans for its IPO in Hong Kong, according to company sources. There, the securities regulator must also agree, which could happen on Tuesday. In total, Ant wants to raise up to $ 35 billion with his issue. That would be the largest IPO in history.
Half of the sum is to be brought in by the simultaneous initial listing on the “Star Market” technology segment of the Shanghai Stock Exchange. The regulator had already given its approval for this. But approval for the Hong Kong issue had suddenly been called into question after reports that China’s government was investigating Ant Financial’s conduct.
Questionable conditions and procedures
The regulators are said to have taken particular offense at the fact that Ant did not involve any traditional investment banks for the portion it offered to small investors in mainland China. Instead, the group had sold the shares to its own customers on very questionable terms with the help of five funds on its own Alipay app. However, they only receive shares in Ant for 10 percent of the amount paid, which they also have to hold for 18 months. While the company justifies this with the fact that the holding period is intended to exclude rapid sales and subsequent price fluctuations, critics accuse the group of exploiting its market power. In China’s financial circles there has long been criticism of Ant, who is offering more and more classic financial transactions with its Alipay app.