Tough new rules on microlending may force changes to company’s business
Now that Ant Group’s would-be record initial public offering is on ice, what’s next for the high-flying fintech behemoth and the investors who hoped to make a quick killing?
Both may be in for a long wait as Ant Group adapts its business to tough new regulations on microlending, one of the company’s biggest business drivers, according to analysts, investment bankers and market experts. And whenever it comes back to the market, Ant is likely to face a significant haircut off its valuation of 2 trillion yuan ($302.5 billion).
The shockwaves of the suspension will spread far beyond Ant Group and affect other fintech companies weighing initial public offerings, an investment banker said. They include JD Digit, the fintech arm of JD.com, which in September issued a prospectus for a 20 billion yuan offering in Shanghai, eyeing a valuation of 200 billion yuan.
How regulators put Ant Group’s booming online credit business under oversight will set an example for regulation of the rest of the industry, a person close to China’s central bank said. The issuance of new draft rules on Nov. 2 for online microlending activities forced the surprise suspension of Ant Group’s debut, planned for three days later.