The possible revival of Alibaba’s Ant Group’s shelved initial public offering (IPO) may signal an end or at least a softening of the regulatory curbs that have crushed many of China’s technology companies since November 2020.
Although the China Securities Regulatory Commission (CSRC), the country’s stock market watchdog, on Thursday (June 9) swiftly denied a media report that it had started early-stage talks on resurrecting Ant Group’s abruptly canceled IPO, it added that it supported eligible platform companies to list at home and abroad.
Alibaba’s ADR shares have been on a roller coaster ride in the United States, soaring 22% in the first three days of the week only to fall as much as 8.1% on Thursday on the CSRC’s cold water statement. On Friday, Alibaba’s Hong Kong-listed shares rose 1.35% to HK$112.8 (US$14.37).
Chinese media said Ant Group’s recent appointments of Chinese solicitor Yang Xiaolei and CSRC former vice-chairman Laura Cha as new independent directors were likely related to the fintech company’s plan to debut in Shanghai and Hong Kong.
In November 2020, Ant Group’s planned $37 billion IPO, which would have been the world’s largest ever, was abruptly stopped less than 48 hours before its scheduled listing. That marked the first salvo in a sharp tightening of rules and regulations for China’s tech companies that has torpedoed market confidence in their shares and outlooks.
ByteDance, the Chinese owner of TikTok, announced last July it would postpone its IPO plan in the US after it was told by China’s cyberspace and securities regulators it needed to address data security and other issues.
At the same time, the Cyberspace Administration of China (CAC), removed the app of Didi Global, a Chinese ride-hailing company, from local phones and accused the company of illegally collecting users’ personal data.
The State Administration for Market Supervision (SAMR) later said food delivery companies should take steps to ensure their deliverers make at least the local minimum wage, reduce their workloads and strengthen traffic safety education.
Between last November and March this year, Alibaba, Tencent, Baidu and other companies were fined for violating China’s antitrust law during 2012-2015. More rules were unveiled by regulators to curb internet platforms’ live-streaming and e-commerce services.
Last October, Alibaba Group founder Jack Ma was seen stepping off a super yacht on the Spanish island of Mallorca. Media reports said Ma visited Europe to inspect new technologies for agriculture and the environment.
On March 15 this year, the Hang Seng Index fell to a six-year low as technology and property stocks dropped by more than 10% in a massive sell-off. The index rebounded on March 16 after Chinese Vice-Premier Liu He said the central government would actively prioritize policies favorable to markets.
Liu said relevant departments would improve established plans to govern the platform economy and steadily complete “rectification work” on large platform companies as soon as possible through standard, transparent and predictable regulation.
On April 12, the People’s Bank of China (PBoC), the CSRC, the China Banking and Insurance Regulatory Commission and the State Administration of Foreign Exchange held a meeting with Ant Group’s executives and urged them to rectify the company’s operations by improving consumer protection, managing risks of financial activities and products, enhancing corporate governance and protecting the information security of the public and the nation.
On April 27, a State Council meeting chaired by Premier Li Keqiang said China would promote the development of its platform economy to create more jobs as the country’s economy was seriously hurt by virus outbreaks since mid-March. Li said on May 18 that the central government supported platform companies to go public locally or abroad.
On Thursday, Bloomberg said Chinese financial regulators had started early-stage talks on a potential revival of Ant Group’s IPO.
In a statement, the CSRC said it had not conducted evaluation and research work in this regard, but it supported eligible platform companies to list domestically and overseas. Separately, Ant Group said it was focusing on steadily pushing forward with its “rectification” work and did not have any plan to initiate an IPO at present.
Prior to this, Ant Group announced on June 1 that it added Yang Xiaolei and Laura Cha as independent directors to its board. Jiang Fang, one of three Alibaba Group representatives, will leave Ant’s board. With Jiang’s departure, independent directors now make up 50% of Ant Group’s board while one-third of them are women.
Li Daokui, a former advisor to the PBoC, said in an online forum organized by the Singapore-based United Overseas Bank on June 3 that the scrapping of Ant’s IPO plan in November 2020 was a political decision, as top Chinese leaders were shocked by the huge list of the company’s shareholders, which even involved some party secretary members on a city level.
Li said after a flurry of tightening measures, Chinese leaders were less concerned as internet companies now had less influence on Chinese politics. He said the curbs on the technology sector had basically ended.
Follow Jeff Pao on Twitter at @jeffpao3