China Tells Ant It Must Meet New Capital Requirements Before IPO
Comment of the Day

November 03 2020

Commentary by Eoin Treacy

China Tells Ant It Must Meet New Capital Requirements Before IPO

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Ant will have to make changes that include capital increases at its lucrative micro-lending units, people familiar with the matter said. Ant must also reapply for licenses for the units to operate nationwide, the people added, asking not to be identified discussing a private matter.

It’s unclear how extensively Ant will have to overhaul its business to meet all of China’s new regulations, which took effect on Nov. 1 and were designed to rein in systemic risks posed by companies that straddle at least two financial business lines. Representatives for Ant and China’s securities regulator couldn’t immediately comment on the issue after business hours.

The Shanghai Stock Exchange cited a “significant change” in the regulatory environment when it unexpectedly put a stop to Ant’s $35 billion share sale on Tuesday, upending what would have been the biggest market debut in world history. The move came just two days before Ant was due to start trading and a day after Jack Ma, the company’s billionaire founder, was summoned to a rare joint meeting with the country’s central bank and three other top financial regulators.

Eoin Treacy's view

ANT Financial ignored banking regulations to grow its business at an exponential rate. The government was willing to look the other way for a long time which created the illusion they were willing to allow the company to continue to flourish as an innovation within the broader technology sector. That impression was dispelled today.

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