EXCLUSIVE Beijing Gives Initial Nod to Revive Ant IPO After Cool-Sources Crackdown

  • Ant plans to submit preliminary prospectus as soon as July-sources
  • Ant needs CSRC guidance on source prospectus filing deadline
  • Ant says there are no plans to relaunch its IPO statement
  • Warburg Pincus valued Ant at $180 billion at the end of March

HONG KONG, June 9 (Reuters) – China’s central leadership has given billionaire Jack Ma’s Ant Group a green light to resume its initial public offering (IPO), two sources with knowledge of the matter said, in the clearest sign that Beijing is relaxing its crackdown on the technology sector.

Ant, an affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd (9988.HK), plans to file a preliminary prospectus for the Shanghai and Hong Kong share offering as early as next month, said the sources, who declined to be named. due to the sensitivity of the subject.

The fintech giant will need to await guidance from the China Securities Regulatory Commission (CSRC) on the specific timing of filing the prospectus, one of the sources said.

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In a publicly released statement, Ant said it had no plans to relaunch its IPO, without giving further details. He did not respond to Reuters’ request for comment on whether he had received the green light from Beijing.

The company’s stock market listing was hastily filed at Beijing’s request in November 2020. At the time, it was slated to be valued at around $315 billion and planned to raise $37 billion, which would have been a world record.

“Under the guidance of regulators, we are focused on steadily moving forward with our rectification work and have no plans to initiate an IPO,” Ant said on his WeChat account on Thursday.

Neither the CSRC nor China’s State Council Information Office, which handles media inquiries for central leaders, responded to Reuters’ request for comment.

Ant wants to keep the IPO’s turnaround plans low-key until a formal announcement, after it drew regulatory attention in its first attempt in 2020 with the waves the offering created as the world’s largest stock float, a separate source with direct knowledge of the IPO. subject said.

Chinese officials halted the IPO and clamped down on Ma’s business empire after he gave a speech in Shanghai in October 2020, accusing financial watchdogs of stifling innovation.

The IPO derailment marked the beginning of a regulatory crackdown to rein in China’s massive tech sector, which spilled over into other sectors including private property and education, wiping out billions of market capitalizations and triggering layoffs at some companies.

With its economy slowing in a politically sensitive year, when Xi Jinping is expected to secure an unprecedented third term as party leader, Beijing is seeking to loosen its grip on private companies, including tech giants, to help it meet a growth target of 5.5%, something economists said will be difficult to achieve given the COVID-19 lockdowns. see More information

“They’re pulling back on their crackdown to counteract the lockdown they’ve had. Any data outside of China lately has been terrible because of the lockdowns and the last thing they want to do is exacerbate that problem. In the next three to six months, they’re likely to see the China’s crackdown undone,” said David Madden, a market analyst at Equiti Capital in London.

An IPO revival could also mark something of a rehabilitation for Ma, who has kept a low public profile since Beijing took the plunge.

FACILITATING EFFORTS

Chinese Vice Premier Liu He told technology executives last month that the government has supported the development of the industry and will support companies seeking listings at home and abroad. see More information

In another sign of Beijing’s more lenient stance, Chinese company Didi Global, which has been under cybersecurity investigation since last year, is in advanced talks to buy a third of a state-backed electric vehicle maker, Reuters reported this week. Wednesday.

News of the talks comes after the Wall Street Journal reported on Monday that Chinese regulators must complete their investigations into Didi, which could offer investors more hope for its recovery. see More information

Bloomberg reported earlier on Thursday that Chinese financial regulators had begun early-stage talks on a possible revival of Ant’s stock market debut, without mentioning a timeline. see More information

The top securities regulator has set up a team to reassess plans to sell shares, Bloomberg reported.

The regulator later said in a statement that it had not carried out any evaluation or research work on an Ant IPO.

US-listed shares of Alibaba, which owns nearly a third of Ant, tumbled 7% after rising as much as 7% in premarket trading in the Bloomberg report.

U.S. private equity firm Warburg Pincus, a major investor in Ant’s 2018 private equity fundraising, lowered its valuation of Ant to about $180 billion at the end of March from $221 billion a year earlier, a statement said. separate source.

Regulators have instructed Ant to restructure as a financial rather than a technology company, and sources and analysts said the financial sector typically carries lower valuations.

Warburg Pincus declined to comment on Thursday.

“The size of Ant and the IPO will have to be smaller than planned in 2020 because market conditions have changed and cannot be compared to now,” said Dickie Wong, chief executive officer of Kingston Securities in Hong Kong.

US-listed shares of Chinese tech and e-commerce companies, including Didi and Alibaba, rose this week on indications that Beijing’s year-and-a-half crackdown may be easing.

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Reporting by Julie Zhu; Additional reporting by Medha Singh, Abinaya Vijayaraghavan, Scott Murdoch, Kane Wu and Vidya Ranganathan; Editing by Sumeet Chatterjee, Carmel Crimmins, Elaine Hardcastle and David Evans

Our Standards: The Thomson Reuters Trust Principles.

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