The Panda stepped on the Ant
While the US is talking about breaking up big tech, the Chinese government acts. This week, there was one highly anticipated IPO - the BIG ONE. It looks like it ain't going to happen anytime soon.
It was for the Ant Group. Think PayPal on steroids, with 730 million users transferring money, getting small loans or insurance. They wanted to raise somewhere around U$37 billion. Jack Ma's empire, the Alibaba Group - became too big for the Chinese government, despite the fact that he's a member of the communist party.
Just a few days before the official listing on the Shanghai stock exchange, the regulators visited the management of the company and the stock exchange. The outcome? The Ant Group received a note that the 'company’s proposed offering might no longer meet the requirements for listing'. This note also led to the listing cancelation on the Hong Kong stock exchange.
Two things to ponder on:
First - this is not a case when the regulator just woke up to the fact that one of its very successful companies is going public. This is the government making sure that everyone knows who runs the show in that country. Perhaps there weren't enough shares offered as a libation, or the friends in the government who are running banks weren't happy.
Second - The pretext for the listing review was that the Ant Group should be regulated (and listed) as a financial organization and not as a tech company. The Ant Group's platform connects merchants with buyers, lenders with borrowers, and provides access to wealth management services and insurance. That is a story which follows a similar debate about the likes of Uber, Airbnb, or Facebook. Are these tech companies or are they in the taxi, hotel, or publishing businesses?
What's next for the Ant Group? I am sure they will appreciate the gravity of the situation and comply with the regulators’ suggestions. After all, it will be in everyone's best interest to have government-controlled institutions become the global payment system.
... and that's the recurrent pattern.