China warned Jack Ma and senior Ant Group Co. executives that the fintech giant will face new curbs on its expansion, highlighting growing regulatory risk for the world\u2019s largest initial public offering just days before its trading debut.<\/p>\n
Ma, Ant\u2019s billionaire co-founder and one of China\u2019s most powerful businessmen, was summoned to a rare joint meeting on Monday with the country\u2019s central bank and three other top financial regulators. While neither side disclosed details of what was discussed, people familiar with the matter said Ant\u2019s leadership team was told the company will face increased scrutiny and be subject to restrictions on capital and leverage similar to banks.<\/p>\n
Investors have long understood that Ant would fall under new Chinese regulations on financial conglomerates, but the meeting may nonetheless temper the frenzy surrounding history\u2019s biggest stock-market debut. Ant is due to start trading on Thursday after raising at least $34.5 billion in an IPO that attracted more than $3 trillion of orders from retail investors in Shanghai and Hong Kong.<\/p>\n
\u201cRegulatory risks are the biggest risk factor for Ant Group,\u201d Kevin Kwek, an analyst at Sanford C. Bernstein, said in a note. \u201cWe think the news will only be incrementally negative to the listing and believe most investors will remain optimistic on Ant\u2019s positive long term prospects. Investors might nevertheless revisit their assumptions of growth given the clear signs of regulatory intervention.\u201d<\/p>\n
Ant Chairman Eric Jing and Chief Executive Simon Hu joined Ma at the meeting, which included the banking watchdog, the China Securities Regulatory Commission and the State Administration of Foreign Exchange, according to a CSRC statement on Weibo. Ant said in a statement it will \u201cimplement the meeting opinions in depth\u201d and follow guidelines including stable innovation, an embrace of supervision and service to the real economy.<\/p>\n
The central bank, banking regulator and CSRC weren\u2019t able to provide additional comment outside regular business hours.<\/p>\n
Ant has been hit with a wave of fresh rules in recent months as China tightens control over online lenders and companies that operate across multiple financial business lines. The measures have included capital and licensing requirements, a cap on loan rates and limits on Ant\u2019s use of asset-backed securities to fund quick consumer loans. On Monday, the banking regulator released draft rules that would force Ant and other operators of online lending platforms to fund a greater share of the loans they offer together with banks.<\/p>\n
Good Innovation<\/p>\n
The Hangzhou-based company, a 2010 offshoot of e-commerce giant Alibaba Group Holding Ltd., dominates China\u2019s payments market via the Alipay app. It also runs the giant Yu\u2019ebao money market fund and two of the country\u2019s largest consumer lending platforms. Other businesses include a credit scoring unit and an insurance marketplace.<\/p>\n
Ant has faced censure in Chinese state media after Ma last month criticized local and global regulators for stifling innovation and not paying sufficient heed to development and opportunities for the young. He compared the Basel Accords, which set out capital requirements for banks, to a club for the elderly.<\/p>\n
Adv<\/em>.<\/strong><\/p>\r\n\r\n \u201cGood innovation is not afraid of regulation, but is afraid of outdated regulation,\u201d he told a Shanghai conference. \u201cWe shouldn\u2019t use the way to manage a train station to regulate an airport, neither should we regulate the future with the method from yesterday.\u201d<\/p>\n Guo Wuping, head of consumer protection at the China Banking and Insurance Regulatory Commission, wrote in commentary on Monday that Ant\u2019s Huabei consumer lending service was similar to a credit card but with higher charges. Fintech companies use their market power to set exorbitant fees in partnerships with banks, which provide most of the funds required, he said.<\/p>\n Ant, which has more than 700 million monthly Alipay users, has made partnering with traditional banks a centerpiece of its strategy. Its lending platforms extended credit to about 500 million people in the 12 months through June, charging annualized rates on smaller loans of about 15%.<\/p>\n New measures proposed by the banking regulator on Monday for online lenders included imposing a cap on the amount of loans to be offered to individual borrowers as well as the leverage.<\/p>\n The draft rules could deal a major blow to Ant as they require platform operators to provide at least 30% of the funding for loans. About 2% of the 1.7 trillion yuan ($254 billion) of loans Ant facilitated as of June were currently on its balance sheet, the company said in its prospectus.<\/p>\n\n Ant declined to comment on the proposed measures.<\/p>\n The market impact of fresh regulatory scrutiny on Ant will become clearer when the stock debuts on Thursday, but for now investors appear to be taking the news in stride. Alibaba, which owns about a third of Ant, rose 2% in New York on Monday. Ant maintained early gains in the so-called gray market in Hong Kong, where shares were said to be trading at a 50% premium to the HK$80 listing price on Monday.<\/p>\n\n China warned Jack Ma and senior Ant Group Co. executives that the fintech giant will face new curbs on its expansion, highlighting growing regulatory risk for the world\u2019s largest initial public offering just days before its trading debut. Ma, Ant\u2019s billionaire co-founder and one of China\u2019s most powerful businessmen, was summoned to a rare joint …<\/p>\n","protected":false},"author":1,"featured_media":67783,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[38],"tags":[4421],"yoast_head":"\n\r\n \t