China blocked Jack Ma’s Ant IPO after investigation revealed likely beneficiaries: Report

NEW DELHI: When China late last year decided to pull the plug on Ant Group’s $37-billion initial public offering (IPO), it was said to be in reaction to co-founder Jack Ma‘s criticism of the country’s financial system. Apparently, there was another reason that led to quashing of what could have been the world’s largest-ever IPO.
The main reason seemed to be “growing unease in Beijing over Ant’s complex ownership structure and the people who stood to gain most from it,” The Wall Street Journal (WSJ) said in a report on Tuesday.
“Behind layers of opaque investment vehicles that own stakes in the firm are a coterie of well-connected Chinese power players, including some with links to political families that represent a potential challenge to President Xi and his inner circle,” the report added.

One of Ant’s investors is Boyu Capital, a private-equity firm founded in part by Jiang Zhicheng. Jiang Zhicheng is the grandson of former Chinese leader Jiang Zemin. Many of Jiang Zemin’s allies have been purged in Xi’s anticorruption campaign, though he remains a force behind the scenes, the WSJ said in its report.
For months, speculation over Ma’s whereabouts has run rampant. Last week, the co-founder of Ant Group Co and Alibaba Group Holding Ltd was spotted playing golf.

It was the first known Ma sighting since the former English teacher joined a live-streamed video chat with rural educators on January 20.
While that appearance helped quiet talk of Ma’s detention, speculation about his standing with China’s Communist Party has continued to swirl as authorities clamp down on his sprawling business empire.

(Alibaba and Ant Group co-founder Jack Ma disappeared from public view for three months)
The regulatory crackdown on Ma’s business empire in China followed an October 24 speech in which he blasted the country’s regulatory system. Ant pulled its IPO just days before the Hong Kong and Shanghai dual debut was scheduled.
Authorities launched an antitrust probe into the tech sector, with Alibaba taking much of the heat, and pushed Ant to revamp its business structure to bring it under tighter regulatory supervision. The garrulous Ma disappeared from public view for three months.

The planned tighter regulation of Ant will give it a market value in line with financial institutions, far lower than its initially envisioned valuation as a fintech company.
Ant, which began as Alibaba’s payments arm, sits on an enormous cache of consumer data. That is the backbone of China’s internet platforms, with companies offering financial products from consumer loans to investment products via smartphones.
(With inputs from Reuters)

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