When I heard that moves by Chinese financial regulators had forced
the Shangahi securities market to suspend Ant Group’s massive planned
IPO, my first thought was that, if the offering had been planned for the
U.S. the called halt to the offering might well give rise to a “failure
to launch” claim. However, since Ant Group’s IPO was planned for the
Shanghai and Hong Kong exchanges, the possibility of a claim seemed
remote. As it has turned out, however, a failure to launch claim has
been filed in the U.S. after all, with the added twist that the
corporate defendant in the lawsuit is not Ant Group itself, but instead
it is Alibaba, the U.S.-listed Chinese Internet commerce company that
owns 33% of Ant Group’s equity interest. As discussed below, the new
lawsuit against Alibaba has a number of interesting features.To get more
latest ant group news, you can visit shine news official website.
Background
Ant Group is a Chinese online payments and lending processing company offering a wide variety of services and financial products, including insurance, the sale of mutual fund investments, and utility bill payments. Ant grew out of an online escrow service called Alipay created in 2004 within Alibaba Group Holding Ltd. Jack Ma, Alibaba’s co-founder and then-Chief Executive, later carved out the business, and as it grew the business was renamed to Ant Group. Ma is considered China’s wealthiest individual.
On July 20, 2020, Ant Group announced that it has begun the process for a concurrent initial public offering on the Shanghai and Hong Kong stock exchanges. On October 26, 2020, Ant Group priced its IPO and was set to raise $34.5 billion. The target date for the IPO was November 5, 2020. A completed offering of that size would have made the Ant Group offering the largest IPO in history, larger even than Saudi Aramco’s December 2019 $29.4 offering, as well as Alibaba’s own September 2014 $25 billion offering in the U.S.
On Monday, November 2, 2020 Chinese regulators summoned various Ant company officials to a meeting, including Ma; Eric Jing, Ant’s executive chairman; and Ant’s Chief Executive Simon Hu. The meeting including representatives from four Chinese financial regulators, including the People’s Bank of China, the China Banking and Insurance Regulatory Commissions, the China Securities Regulatory Commission and the State Administration of Foreign Exchange. According to a November 2, 2020 Financial Times article about the meeting (here), “the Chinese word used to describe the interview – yuetan – generally indicates a dressing down by authorities.”
According to Ant, in the meeting, “views regarding the health and
stability of the financial sector were exchanged.” The Ant executives
were also apprised of new draft rules from China’s banking regular
regarding microlending. If implemented the new rules could slow the
expansion and profitability of Ant’s fast-growing consumer business and
lending units.
On Tuesday, November 3, 2020, Ant Group disclosed that the Shanghai
stock exchange suspended Ant’s debut, which had been planned for
Thursday November 5, 2020. The Ant Group statement said that the
exchange had suspended the offering because Ant Group “may not meet
listing qualifications or disclosure requirements due to material
matters related to” the November 2 meeting, and also because of “the
recent changes in the Fintech regulatory environment.”
A November 12, 2020 Wall Street Journal article (here) said that Chinese President XI Jingping “personally made the decision to halt the initial public offering.” The Journal article suggests that statements Ma had made at an October 24, 2020 financial forum in Shanghai had “infuriated” Chinese government officials.
Ma took the stage at the October 24 event after a senior regulatory official had, in his own speech, said that China needed to safeguard its financial system from systemic risks. In his speech, Ma reportedly said that “we cannot regulate the future with yesterday’s means,” adding that “There’s no systemic financial risks in China because there’s no financial systems in China. The risks are a lack of systems.”
