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Chinese fintech giant Ant Group was expected to make its trading debut in Hong Kong and Shanghai on Thursday at a valuation of roughly $310 billion in the world’s largest-ever IPO. The debut would have made the company more valuable than each of China’s four major state-owned banks, according to Fortune’s 2020 Global 500 ranking.
On Tuesday, just two days before the planned listing, regulators in Shanghai pulled the plug, at least temporarily.
The Shanghai exchange told Ant in a notice that changes in financial technology regulatory requirements and other “major issues” meant the company didn’t meet the requirements needed to list on its exchange.
The news sent shockwaves through the financial world, and came as a surprise to Ant. Just hours before the suspension, the company was still confirming attendees for its planned post-IPO party in Hong Kong, according to Bloomberg.
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In a statement on Tuesday, Ant apologized to its investors and said it would “wait for further notice” from the Shanghai stock exchange before making any further announcements on the status of the IPO. It delayed its planned listing in Hong Kong too. Ant did not respond to Fortune’s request for comment.
The news throws a wrench in the prospects of Chinese tech firms looking to raise capital. For months now, overseas exchanges have grown increasingly inhospitable for Chinese firms, and markets closers to home—Shanghai, Shenzhen, Hong Kong—have seemed to offer solace. But the mounting problems for Ant offer a sober reminder to Chinese companies that their home turf has its own special set of risks.
Risks at home
For years, China’s government has sought to help promote the growth of its tech giants. China’s Internet restrictions, collectively referred to as the ‘Great Firewall’, have insulated Chinese tech from foreign competitors and paved the way for Chinese firms to dominate the domestic market.
Chinese tech giant Tencent, for example, saw its WeChat app become China’s go-to social media and messaging platform after Beijing blocked access to American social media sites like Facebook and Twitter.
But that nurturing comes with strings, mainly the mutual understanding that a company will never outgrow the government’s grasp. A business can boom—but only to the point that Beijing can still rein it in. The government has a toolkit that keeps companies in-check: messaging via the media outlets it controls and new laws and restrictions that it can impose on a whim.
In 2017, Tencent drew Beijing’s ire after its Honor of Kings gaming app was downloaded hundreds of millions of times in China. The People’s Daily, the official newspaper of the Chinese Communist Party, blasted the game as “poison”…
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