The US is trying to delay this year’s largest IPO

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Ant Group, which belongs to the sphere around the Chinese internet giant Alibaba, was scheduled to carry out a share issue and listing in Shanghai and Hong Kong at the end of October.

The facilitators have planned to raise between 30 and 35 billion dollars in the issue for what is the world’s largest financial technology company. This is a new record. The listing is now in danger.

– It’s outrageous

Sources tell Reuters that the US State Department has sent a proposal to President Donald Trump that Ant Group be placed on a blacklist (“Entity list”) and subject to severe sanctions – similar to what has happened to Huawei.

Leading Republican politicians in the Senate support the proposal.

– It is outrageous that Wall Street is rewarding the Chinese Communist Party’s obvious attack on Hong Kong’s freedom and autonomy by arranging for an IPO in Hong Kong and Shanghai. The Trump administration should seriously consider the options available to delay the listing of Ang Group, Senator Marco Rubio told the news agency.

The US financial institutions Citigroup, JPMorgan and Morgan Stanley are facilitators of the issue together with China International Capital Corp.

Alibaba owns 33 percent of the company. Alibaba’s founder Jack Ma, who has a fortune of over $ 50 billion and sits at the top of the Chinese billionaire survey, controls the company via intricate shareholder agreements.

– First and foremost symbolic

Ant Group is behind the payment platform Alipay, which almost all Chinese have installed on their smartphones. In 2019, transactions worth $ 16,000 billion were brokered. Around 80 million stores, restaurants and online stores offer the payment solution.

Ant has entered into partnerships with competitors and traditional banks in Africa, Europe and other Asian countries. Norske Vipps entered into a strategic partnership with Ant two years ago. Less than five percent of transactions come from markets outside China.

– This is first and foremost symbolic. It will not stop Ant from either being listed on the stock exchange or investing in important new areas, such as blockchain. However, blacklisting is effective in another area; to make other countries careful about linking their technical ecosystems to China, says Geopolitical Adviser Abishur Prakash at the Center for Innovating the Future (CIF) in Canada to CNBC.

– Conflict of interest? Clearly

Chinese authorities have launched a separate investigation. Ant is said to have offered users of the Alipay app the opportunity to participate indirectly in the issue by buying into five funds that have been allotted shares exclusively.

– Is this a conflict of interest? It’s quite clear. From an ethical point of view, you use your own platform to raise money from your customers to invest in your own company, says director Peter Alexander of the Chinese consulting company Z-Ben to the Financial Times.

The Ant management rejects this and says that the newly established funds have not acted as guarantors for the planned issue.

The Alipay app offers over 6,000 different investment products. Chinese regulators are considering whether this is legal. This can have major consequences for the role of brokerages and investment banks in connection with future issues and IPOs.

– This can have a dramatic impact on the Chinese capital markets. The aim is to allow Chinese companies to increasingly bypass traditional investment banks and gain direct access to the sea of ​​capital that small investors hold via apps such as Alipay and Tencent’s WeChat, says former investment director Brock Silvers at Adamas Asset Management to the Financial Times.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other form of use of all or part of the content, can only take place with written permission or as permitted by law. For further terms see here.

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