Connect with us


From IPO roar to suspension: The story of the Fintech hatch-Ant Group



The story of the Fintech hatch-Ant Group
The story of the Fintech hatch-Ant Group, Photo by Nuno Alberto on Unsplash

OPINION: On 3 November 2020, the Hong Kong stocks and investors received the heaviest blows of their lifetime as the Chinese regulators unloaded Ant Group’s IPO offer. After a meeting between the Chinese innovator Jack Ma, the top officials, and regulators in China, the IPO listing got suspended.

Ant Group was supposed to raise $35 billion, unleashing a new record in the history of IPOs by outshining Saudi Aramco’s IPO of $29.4 billion in 2019. This suspension comes after Jack Ma recently slammed the financial regulators over being innovation restrainers.

It seems that Jack Ma’s plain-spoken words cost Ant group millions and an IPO listing too. This IPO, whose’s listing table completely turned in short 72 hours, needs to dwell at length. It continues to be the prime story these days, which needs to be talked at a blue streak.

The titan business of Ant group

The Chinese business magnate Jack Ma successfully flourished with his multinational company Alibaba. He got keen on building a FinTech company from 2004.

He initially kickstarted with a digital payment app named “Alipay” that garnered more than 700 million users as a third-party app. In 2014, its mammoth success was then designated a name Ant Group by Jack Ma.

This digital payment offering was then expanded into the diverse fields of wealth management, retail lending, and insurance business.

Ant group’s business’s celebrated fact is that its offerings are accessible to micro-enterprises that struggled to hunt for loans previously due to no collateral available. Another clap worthy proposition of the Ant group lies in nurturing gender equality in entrepreneurship through its gender-obtuse loan programs.

China’s banking system always complained of swinging interest and exchange rates. In 2013, the Ant group came as a savior by announcing Yuebao—a money market finance fund. The working mechanism of investment allowed investors to bag the rightly suited market interest.

Hence, it came to be regarded as a de facto financial liberalization across China as it adopted an intolerant approach towards low bank interest rates.

The real reason behind the suspension of IPO listing

China has historically seen a strictly managed banking system with the regulators exceeding an upper hand over the third-party apps in the lending business.

In October 2020, Jack Ma, in the Bund Summit, heavily criticized the feeble banking system in China that was devoid of supporting innovation. He tagged China as “young” and labeled the level of financial regulations to be stifling for the consumer lending business.

He even made disgracing remarks on the Chinese lending business by calling it having a “pawnshop mentality.” The opinioned comments made by him disgusted the top officials of the Communist Party of China as they suspended the IPO listing on November 3, 2020.

The Star market at Shanghai, set to welcome history’s largest IPO, was left dispirited as new online lending regulations would roll out. The Ant group mentioned in a press release that the future will hold a prominent change for micro-lending and digital payment apps.

The aftermath of the suspension of the IPO plan

On November 3, 2020, Jack Ma’s open attack on China’s financial watchdogs vanished off $3 billion from his net worth. Further, the share value of Alibaba stock fell hugely by 10%, and investors were refunded off their application money for the IPO listing.

Ant group is now committed to complying with the new disclosure and transparency requirements for micro-lending businesses. As per the reports, the new draft of regulations is centered on delimiting profits and spiking up the cost of compliance for FinTech companies in the future.

The Ant group has put its new IPO plans underway as the Chinese lending market’s stout regulatory setup continues to operate.

Wrapping up

Ant Group envisions to tap borrowers and simplify the lending system. Imagination and innovation are the dual swords of its new-age idea—which dives into solving China’s biggest consumer lending problem.

Dismally, the traditional leaders in China don’t lend support to the new era’s models. They fail to understand that online payment systems will enhance China’s conventional banking system by bargaining power and efficient credit.

A close instance from the US can be drawn as it has a liberating banking system with no intrusion from the top government authorities. They let online lenders provide viable solutions to bad loans, risks credit, and financial systems.

The Ant Group’s wave of digitization was meant to diminish the need for collateral, which continues to be a financial accelerator. The Chinese banking system continuously receives major shocks driven by collateral, while FinTech lenders now want to embark upon a new journey to stop this.

For China to be in line with emerging trends, it needs to be more proactive and take hints from Jack Ma’s views on borrowing, payment, and lending practices.

This way, it can ride prosperously by paying heed to the need to promote digital and online banking payment systems.

An avid learner having infatuation for numbers and finance. Also, an individual with unfiltered opinions who likes to mix the metrics of both professionalism and creativity.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *