Beijing is launching an intensifying crackdown over how tech billionaire Jack Ma originally won approval for an initial public offering (IPO) in China, The Wall Street Journal reported on Tuesday (April 27), citing sources.
Chinese regulators are investigating state officials regarding how Ma got fast approvals last year for Ant Group’s proposed dual listing in Shanghai and Hong Kong, sources told the Journal.
The government’s investigation is targeting regulators who gave Ant’s IPO the green light in moving ahead with a public offering. Beijing is also looking into big state firms that would have reaped benefits from the public offering, according to the WSJ.
“What happened is deeply embarrassing for regulators because they should have more effectively coordinated before approving the IPO,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics who specializes in China’s FinTech space, per WSJ.
“By not doing so, they were stuck in a lose-lose situation of either the last-minute pause or, worse, forcing massive losses on IPO investors by changing the regulatory stance post-IPO,” Chorzempa added.
The Chinese billionaire’s relationships with state officials are also being probed as part of the scrutiny, the sources told the news outlet.
Since Ant Group’s IPO was scuppered in November 2020, Ma has been keeping a low profile and can’t leave the country until his company revamps its business and the government probe is over, the sources told the Journal.
The latest probe follows Chinese President Xi Jinping’s statement that Big Tech companies can’t use advantages like data, size, and capital to sidestep antitrust regulations. He has pushed for revealing compromising issues within the financial sector.
Beijing asked Ant Group in March to turn over the financial data it had on its customers. The company said it would provide information on 500 million borrowers, but Chinese regulators have said the data was insufficient.
Despite its failed IPO, global investors have pegged Ant’s valuation at more than $200 billion. When it was filing to go public last year, its value was about $315 billion.
The structure of Ant Group is one reason given for its IPO being pulled by regulators. Unreported investigations that happened weeks before the IPO indicated that Ant’s filing hid the complex nature of its ownership.
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