Jack Ma offered to give parts of Ant Group to the Chinese government in a November 2 meeting, according to a new Wall Street Journal report, after Ma publicly scorned the nation’s financial regulatory system in late October.
Ma’s offer failed to win China over, however, and authorities pulled the firm’s would-be $37 billion IPO on November 5, following the introduction of new lending regulations.
The new details help paint a picture of how what was going to be the world’s largest IPO in history came screeching to a halt.
Experts say Ant won’t be the buzzy fintech disruptor it was touted as if the firm ever decides to resume its IPO. Instead, it will likely work more closely with traditional financial institutions.
Jack Ma attempted to extend an olive branch to the Chinese government on November 2 when he offered to give parts of his fintech firm Ant Group to the nation, according to a Wall Street Journal report.
The reported offer came after Ma publicly scorned the Chinese nation in late October, prompting Chinese President Xi Jinping to reportedly personally instruct regulators to dig into Ant’s financial risks.
“You can take any of the platforms Ant has, as long as the country needs it,” Ma told regulators in the early November meeting, according to sources that spoke to the Journal. Ma, however, failed to patch things up with China, and authorities slammed the brakes on what would have been Ant’s $37 billion IPO on November 5.
Ant Group did not immediately respond to Business Insider’s request for comment.
The report comes after what was a public whirlwind IPO process for the Chinese fintech firm. The company was expected to raise $37 billion, which would have made the IPO the largest in history. It would have catapulted the firm past some of the biggest banks like Goldman Sachs, signaling that the fintech market would be ripe for fast-moving disruptors in the traditional financial sector.
But Ma criticized China’s financial regulatory system at a Shanghai conference on October 24, calling the rules ill-suited for supporting healthy innovation. A week later, regulators suddenly introduced new regulations for online lending, which directly impacted Ant’s successful lending and credit business. The new rules disqualified Ant for an IPO, and Shanghai suspended its offering on November 3. The firm willingly pulled its Hong Kong listing on the same day.
Experts previously told Business Insider that Ant now has its work cut out for it. If it wants to resume its IPO, it’ll have to review China’s new lending rules and reapply to qualify for its dual listing. And if it does go public, experts said that Ant won’t be the buzzy fintech disruptor it was once touted as and will likely be injected with a more conservative banking methodology. As the WSJ reports, that could include allowing Chinese banks to buy into Ant, which could help pick up the slack if Ant fell short on capital.
China has also introduced more regulations to keep tech firms in check in the nation. That includes setting stricter anti-competitive behavior guidelines, like preventing firms from banding together to stifle smaller competitors and from sharing sensitive user data. The new rules, introduced in early November, directly impact China’s biggest tech companies, including Alibaba.
Daniel Zhang, the CEO of Alibaba, which was founded by Ma and is an affiliate firm of Ant, said the new restrictions were “timely and necessary.” Zhang’s comment contrasts sharply with Ma, who also called the people enforcing a set of international banking regulations as “an old man’s club.”
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