Ant Group’s initial public offering could be delayed by at least six months and its valuation sharply reduced after Beijing abruptly halted its trading debut this week, sources directly involved in the deal and investors said, reported the Financial Times.
Lawyers involved in Ant’s listing said the company would have to respond to Chinese regulators’ demands and submit a new IPO prospectus in Hong Kong, which could take at least six months. “The key thing is these new regulation changes,” said one FT source with direct knowledge of the deal.
The draft regulations could weigh heavily on Ant’s lending business, which drove about 40% of its sales in the first half, and have an impact on the company’s valuation, said the FT.
The rules require internet platforms to provide at least 30% of the funding of their loans and to cap loans at RMB 300,000 ($44,843) or a third of a borrower’s annual salary, whichever is lower. Currently, Ant funds only 2% of its total loans with the rest coming from other sources such as banks. The changes could dramatically alter the risk profile of Ant, which currently acts as a high-tech matchmaker between banks and borrowers.