Chinese regulators are said to be investigating whether Alibaba (NYSE:BABA) has been engaging in non-competitive practices. Simultaneously, Ant Group – a top Fintech, is receiving additional scrutiny. Ant Group is the parent company of Alipay, China’s largest mobile payment platform.
Additionally, it has been widely reported that Chinese authorities are meeting with Ant Group representatives regarding issues such as consumer protection and competition. The People’s Bank of China stated:
The People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange will hold a regulatory talk with Ant Group in the coming days. The talk is to urge and guide Ant Group to follow market-driven and law-based principles, implement the requirements regarding financial supervision, fair competition and protection of consumers’ legitimate rights and interests, and ensure regulated operation and development of its financial businesses.
Earlier this year, Ant Group, a subsidiary of Alibaba, was poised to go public creating a potential windfall for investors. The Fintech was queued up to be the largest Fintech IPO of all time. The entire process came to a screeching halt when Chinese officials stepped in – allegedly due to critical comments targeting Chinese regulatory authorities emanating from Alibaba founder Jack Ma.
Shares in Alibaba have tanked on the news of government action dropping more than 15% on the NYSE today.
So will Ant Group ever be able to complete an IPO?
It would be a shock if, at some point, Chinese authorities do not greenlight a public offering. Ant Group is well-positioned to grow market share beyond Asia – a strategically important reality for the ruling party. It is more a question of when, not if. And what Alibaba and Ant Group must do to get back into the good graces of the Chinese government.