Suspension of Ant Group’s IPO likely to cost investment banks US$400 million in fees

Name: What is Jack Ma’s Ant Group and how does it make money?
Uploaded: 2020-11-06T12:15:21.000Z
Duration: 3 min 4 s
Description: What is Jack Ma’s Ant Group and how does it make money?

Two dozen investment banks had been set to receive a fee worth 1 per cent of the offering in Hong Kong

The deal had been set to shake up the league table for Hong Kong’s equity capital market transactions

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The underwriters of Ant Group’s IPO had been set to split an underwriting fee worth about US$400 million following its debut. Photo: Reuters

Chad Bray

Published: 8:15pm, 6 Nov 2020Updated: 11:28pm, 6 Nov 2020

The suspension of Ant Group’s debut is likely to cost a cadre of the world’s largest investment banks nearly US$400 million in fees collectively, after Chinese regulators this week called a halt to what was expected to be the world’s biggest initial public offering ever.

The dual listing in Hong Kong and Shanghai was expected to raise as much as US$39.67 billion, topping a US$29.4 billion listing by state-owned energy giant Saudi Aramco last year and a US$25 billion offering by Chinese e-commerce company Alibaba Group Holding in 2014. Ant is an affiliate of Alibaba, which also owns the South China Morning Post.

Ant delayed its offering 48 hours before its highly anticipated debut on Thursday following a meeting with China’s top financial regulators, saying it led to a “significant change” in the company’s business environment and might result in the fintech company not fulfilling its listing requirements or disclosure rules.

The scuttled IPO came a day after regulators published draft rules to curb a rapidly growing online microfinance market in China, where Ant and other digital platforms use big data to help banks assess and provide loans to small businesses and individual borrowers.

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

A revived IPO could take months to happen. In the meantime, Ant moved this week to refund US$167.7 billion deposited by Hong Kong retail investors seeking a chance to buy shares of the owner of superapp Alipay.