What happened and why The Shanghai and Hong Kong stock exchanges pulled the plug on Ant Group’s record-breaking IPO earlier this week after regulators decided they had a few more questions for Jack Ma and his fellow suits. 🐜 Ants in a row... Ant had already lined up $34bn of investment from institutions from across the globe and the listing was expected to land yesterday, in what was being labelled 'the biggest IPO in history'. So, who came along and burst the bubble... It started with a heads-up... Ant had already raised some regulatory risks attached to the IPO that regulators seemed to be cool with...On second thoughts... Then on IPO-eve, the listing was suspended due to 'vague regulatory reasons' that disqualified it from listing on the Chinese market. In normal walks of financial life, a last minute shelving of an IPO can just about be stomached. But Ant had investors drooling. The compay's payment app, Alipay, carries 1.2 billion global users and saw 580 million people in China make a purchase via Alipay in the past six-months. Then there's Yu'e Bao, is the world's largest money-market fund with over ~600 million users. So you can see why Chinese and international investors were queuing up for a slice of the Ant pie and they had to stop taking orders for the fintech early. Well, its about Ant and the moment in time... Part of history... Most Chinese investors wanted to be a part of the biggest listing ever as a badge of honour and status symbol.Betting on a bump... they're also keen to get in early on a stock that should gain a shine as it joins indexes and other portfolios that are then triggered to buy the stock. Ant had raised the big money from the deep pockets of institutional investors like mutual and investment funds. These tend to be the only investors who can get their hands on the stock prior to the IPO, before being made available to the great unwashed. If and when the stock price pops on listing, the institutions are usually left to enjoy a price rise. 💭 Why it matters...? Well, according to Statista, the average American IPO gained 19% on the first day in 2019, feeding the mouths of those institutional investors. The long-and-short of it, as a retail investors, getting your hands on stock pre-IPO, is far from simple. | The Takeaway Giant Ant... Ant was all set for a market valuation in the region of $300bn which would put it on a par with JPMorgan. But the latest episode in Ant's supercharged history shows how even iconic billionaires as influential as Jack Ma - the founder of Alibaba and Ant’s biggest shareholder - is expected to toe the Chinese Communist party line. The Chinese 'regulator' doesn't seem to have enjoyed Ma’s comments last month that 'red tape' was stifling innovation. But don't be surprised if they return for an IPO in near future.
