Ant Group's record-shattering IPO is highly unlikely to get done in 2021, a new report says
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- The chances of an Ant Group initial public offering in 2021 look decreasingly likely as China looks to overhaul rules and regulations related to the fintech industry, according to a new Bloomberg report.
- The delayed public debut of Ant Group would be a blow to investors who were poised to benefit from what was supposed to be the largest IPO ever, including Alibaba.
- Alibaba, which owns a third of Ant Group, fell as much as 5% on Monday.
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The highly anticipated public debut of Ant Group is likely to be delayed in 2021 as China looks to overhaul and implement new rules and regulations related to the fintech industry, according to a Bloomberg report.
The initial public offering of Ant Group was abruptly put on hold by Chinese regulators earlier this month. Investors were anticipating Ant Group to raise up to $35 billion in what would have been the biggest IPO in history.
Ant Group is still in the “early stages” of examining changes that would be required to appease regulators, Bloomberg said, citing regulatory officials familiar with the matter.
“With so much work needed and some rules not yet spelled out, the officials said the initial public offering may not get done before 2022,” Bloomberg said.
The development is a blow to investors in Ant Group that were hoping to cash out with the IPO. Alibaba, which owns one third of Ant Group, fell as much as 5% on Monday, representing the sharpest decline since the IPO was delayed.
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The big challenge Ant Group is facing is not only complying with the new restrictions, but also ensuring that the fintech giant will “fall in line” with the ever changing regulatory environment in China, according to Bloomberg.
Ant Group is now regulated by a joint task force set up by China, led by the Financial Stability and Development Committee, Bloomberg said.
Part of the new regulations would require Ant Group to hold more capital on its balance sheet as it facilitates consumer loans. Bloomberg estimated that Ant Group would require $12 billion in funds to regain compliance with the new rules and regulations.
If the fintech giant is unable to complete its public debut before its IPO filing expires in October of 2021, the company would have to restart the listing process with the Shanghai and Hong Kong exchanges.
The delay in Ant Group’s IPO has led some analysts to slash its valuation estimate in half, Bloomberg noted, serving a blow to those expected to generate a windfall from the IPO, including investment banks facilitating the deal.
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