China halts Jack Ma's $37-bn Ant Group IPO citing 'major issues'

Shanghai, HK postpone listing two days before trading

Jack Ma
Billionaire Jack Ma, chairman of Alibaba Group Holding Ltd., looks on during news conference in Hong Kong, China. Bloomberg

China put the brakes on Ant Group Co’s $35-billion share sale in Shanghai and Hong Kong, derailing the world’s biggest initial public offering.

The Shanghai stock exchange will suspend the listing after Ma was called in for “supervisory interviews” by related agencies, it said in a statement Tuesday. There was “significant change” in the regulatory environment and “such major issues could lead to your company not longer complying with requirements on listing or information disclosure,” the statement said.

The Hong Kong leg will also be suspended, Ant said in a filing shortly after the Shanghai announcement. The fintech company’s debut was expected for Thursday. Alibaba Group Holding Ltd., which owns about a third of a stake in Ant, fell 8 per cent in premarket U.S. trading. Futures on Hong Kong’s Hang Seng index lost as much as 1.2 per cent.

The shock move comes after China’s regulators warned that Jack Ma’s firm faces increased scrutiny and will be subject to the same restrictions on capital and leverage as banks. Ma, Ant’s billionaire co-founder, was summoned to a rare joint meeting on Monday with the country’s central bank and three other top financial regulators.

A representative for Ant couldn’t immediately respond to a request for comment.

“It’s a pretty bad look, where you have a China company conducting the world’s largest IPO, locking in billions from global investors and getting halted on the eve,” said Yu Tianjiao, a Hong Kong-based analyst from Sanford C. Bernstein. “Longer term, investors are going to reevaluate Ant’s price, people who gave it lofty valuations as a tech company will have to start thinking about it more as a financial services firm and question the growth potential.”

Ant’s decision to list on the Star board, a market launched in Shanghai last year, was seen as a major win for the mainland exchange.