The Big Ideas

Why Beijing was right to rein in Jack Ma's rogue Ant Group IPO

Nikkei Asian Review

Nan Li | Shanghai Jiao Tong University
Why Beijing was right to rein in Jack Ma's rogue Ant Group IPO
Why Beijing was right to rein in Jack Ma's rogue Ant Group IPO
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How Ant Financial Gamed the System

February 28, 2021
BIG IDEA | ‘In July 2020, just before their IPO application, Ant Financial not only abandoned the word "financial" and renamed themselves Ant Group, they attempted to list not on the Shanghai or Shenzhen exchanges, where financial institutions list, but rather on the Shanghai STAR Market, which was created as an exchange for high-tech innovators.’
‘One reason: By claiming the mantle of a tech company, and by doing so, Ant sought to avoid appropriate regulatory oversight.’
‘Another reason: By avoiding its appropriate categorization in the economy was that doing so allowed it to boost its IPO price Tech companies typically trade at about three times the price-earnings ratio of financial companies. An appropriately priced IPO would have erased arou

My Take

One of the great side effects of China's putting the kibosh on the Ant IPO is all the reporting that really lifts the hood on the intersection of politics, economics, finance, personal rivalries, and Xi Jinping’s thinking (if not thought). This latest article adds to the series by explaining how Chinese companies – in this case Ant - game both the regulatory systems and the IPO process. There’s a great book to be written here.