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Ant Group’s IPO would have been the world’s largest ever listing. Photo: Bloomberg

Explainer | How an avalanche of rules buried Ant Group’s US$39.5 billion stock sale and looks set to reshape China’s fintech landscape

  • Ant Group will need months at least to assess the fallout from the regulatory shift, make the business compliant with new rules and update potential investors
  • We lay out a timeline of the key events leading up to China halting Ant’s IPO in Shanghai and Hong Kong at the eleventh hour

When internet billionaire Jack Ma walked out of a meeting with the top echelons of China’s regulators on November 2, his hopes of dramatically overhauling financial services in the world’s second-largest economy had just taken a heavy blow.

The regulators told Ma that in the future, greater financial inclusion driven by internet platforms would take a back seat to financial stability and protecting traditional lenders, which are still important policy levers in the developing economy.

The Beijing-based bureaucrats signalled they were about to unleash a slew of new rules that would reset the landscape for financial-technology companies in China.
The tectonic shift in fintech regulation was a shock to Ma and the Ant Group executives with him. The world’s biggest fintech company was just three days away from floating on the Hong Kong and Shanghai stock exchanges in a record-breaking initial public offering (IPO). 
Jack Ma delivers a rousing speech in front of senior bankers and regulators at the Bund Summit in Shanghai on October 24, 2020. Photo: Weibo

Ant executives had sought to gold-plate the firm’s fintech business model by obtaining sign-off on a prospectus for a US$39.5 billion listing plan (including an overallotment option) from the highest regulatory levels only weeks earlier.

The IPO would have pegged Ant’s worth at a stunning US$359 billion, higher than the world’s largest bank, JP Morgan, and bigger than the state-backed Industrial and Commercial Bank of China (ICBC). China feared the privately run company, which was on the cusp of bringing more foreign investors into its capital structure, had become too big to fail.

What the executives did not know when they were marketing the IPO to investors was that the growth and scale of Ant’s digital platform revealed in the listing paperwork had unsettled regulators and stoked concerns of systemic risk.

The relatively conservative central bank, the People’s Bank of China ( PBOC), and the China Banking and Insurance Regulatory Commission (CBIRC) seized oversight of internet platforms’ lending businesses from local authorities.
PBOC’s governor Yi Gang. Photo: EPA-EFE
Later on Monday, the CBIRC and PBOC unveiled swingeing draft rules reining in microlending. The 16-year-old Ant had quickly become China’s largest online credit services provider to consumers and small business owners. Acting as a digital matchmaker between borrowers and about 100 banks was its most lucrative business.

A key line in the draft rules was that the internet platforms would have to put up 30 per cent of the capital for joint loans with banks. Ant has two small loan businesses, Huabei and Jiebei, and currently contributes about 2 per cent of the loans agreed on its platform, while the banks put up the rest.

That news sent Ant executives scrambling to figure out the definition of joint loans – would it only apply to loans where the firm contributed capital? Or all loans agreed over Ant’s platform? Would Ant need a new licence? Managers reached out to their counterparts among regulators for answers.


What is Jack Ma’s Ant Group and how does it make money?

What is Jack Ma’s Ant Group and how does it make money?

Ant will need months at least to assess the fallout from the regulatory shift, make the business compliant with new rules and update potential investors.

There were 7,227 microfinance companies in China with 902 billion yuan (US$135 billion) in loans outstanding as of September 30, according to PBOC data.

On November 2, a CBIRC official also flagged concerns over WeBank’s Weilidai and’s Jintiao and Baitiao services. JD Digits, the fintech arm of, is planning an IPO also in Shanghai.

Further rules may sideswipe other areas of fintech businesses across China. Ant’s business spans digital financial services such as payments, investment and insurance, as well as consumer credit.

Ant’s consumer-lending platform Huabei in the line of fire. Photo: Getty Images

A timeline of the critical events leading up to China halting Ant’s IPO in Shanghai and Hong Kong at the eleventh hour:

April, 2019

China’s super regulator, the Financial Stability and Development Committee (FSDC), led by Vice-Premier Liu He steps up meetings amid perceived heightened financial risks.

July 1, 2020

CBIRC publishes provisional rules for commercial banks’ lending for micro and small businesses to maintain financial security and stability.

July 20, 2020

Ant kicks off IPO process.

July 26, 2019 

PBOC issues draft rules on financial holding companies to rein in risk.

The new regulations follow the emergence of numerous large conglomerates that have developed financial services in recent years, such as Tomorrow Holdings, HNA Group, Anbang Insurance Group, Ant and Fosun, says credit ratings agency Fitch Ratings.

August 25, 2020

Ant files IPO listing applications in Hong Kong and Shanghai.

September 11, 2020

PBOC issues the final rules to regulate financial holding companies effective on November 1. Conglomerates with financial operations will need to apply for a licence by November 1, 2021.

Ant plans to use its unit, Zhejiang Finance Credit Network Technology, as the entity to apply for being a financial holding company subject to regulatory oversights and hold its licensed financial services subsidiaries.

September 16, 2020

CBIRC says the debt of a microloan company shall not exceed four times its net assets.

September 18, 2020

Ant’s IPO gets green light from listing committee of Shanghai’s Star Market.

October 19, 2020

China Securities Regulatory Commission (CSRC) approves H-share offering, and Hong Kong exchange’s listing committee gave green light for Ant’s IPO to go ahead in Hong Kong.

October 21, 2020

CSRC approves registration of Ant’s IPO in Shanghai.
China’s Vice-President Wang Qishan speaking at the Bund Summit in Shanghai. Photo: Xinhua

October 24, 2020

China’s Vice-President Wang Qishan delivers keynote speech at a financial conference in Shanghai, in which he spoke of systemic risk, and how the financial system cannot be divorced from the real economy.
Jack Ma, who co-founded Ant and controls 50.5 per cent of its voting rights, follows with a speech where he describes Chinese banks as “pawnshops” because they ask for collateral before extending loans. The audience includes senior banking officials and regulators.

October 31, 2020

FSDC meets and says: “Our bottom line of no systemic financial risks must be defended.”

“We need to encourage innovation and entrepreneurship, but also strengthen regulation,” the statement said.

Guo Wuping, director of the CBIRC’s consumer protection bureau, blasts the short-term lending arms of internet platforms in an OpEd. Photo: State Council Information Office

November 2, 2020

Guo Wuping, director of the consumer protection bureau at the CBIRC, writes an opinion article saying that Ant’s Huabei and Jiebei, WeBank’s Weilidai, as well as’s Jintiao and Baitiao apps are services similar to credit cards, and that the business of microlending is not dissimilar to the small loans extended by banks. He repeats the need for financial stability and cites the FSDC’s October 31 meeting.

November 2, 2020

Representatives from the PBOC, CBIRC, CSRC and the currency regulator, the State Administration of Foreign Exchange, summoned Ma, Ant’s executive chairman Eric Jing and chief executive Simon Hu for a rare, unscheduled meeting, according to a brief statement by the securities regulator.

Views regarding the health and stability of the financial sector were exchanged, said Ant.

CBIRC, PBOC and other departments publish draft rules for the online microloan industry. The deadline for comments is December 2.

November 3 

The Shanghai Stock Exchange scuttles Ant’s IPO in Shanghai. Ant subsequently announces suspension of listing in Hong Kong.

November 4

Ant refunds retail investors’ money in Hong Kong.

November 5

The China Banking and Insurance Regulatory Commission (CBIRC) denies certain unidentified media reports that purportedly said the Chinese regulator was instructing commercial lenders to stop working with Ant Group’s Alipay service on loans.

“The report is not true. The CBIRC supports banks and insurers to work with Ant Group to collaborate and develop businesses in accordance with laws and regulations to support the real economy,” according to a blog post by Financial News , a newspaper controlled by the Chinese central bank.