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Beijing gives first nod to revive Ant IPO after crackdown cools: report

China’s central leadership has given billionaire Jack Ma’s Ant Group a tentative green light to relaunch its initial public offering (IPO), two sources with knowledge of the matter said, in the clearest sign that Beijing is easing its crackdown against the technology sector.

Ant, a subsidiary of Chinese e-commerce giant Alibaba Group Holding Ltd, aims to file a preliminary prospectus for the stock offering in Shanghai and Hong Kong as early as next month, the sources said, declining to be named due the sensitivity of the issue.

The fintech giant will have to wait for guidance from the China Securities Regulatory Commission (CSRC) on the exact timing of the prospectus filing, one of the sources said.

In a statement made public, Ant said there were no plans to relaunch its IPO, without giving details. He did not respond to Reuters’ request for comment on whether he had received the green light from Beijing.

The company’s listing was hastily dropped at Beijing’s behest in November 2020. At the time, it was expected to be valued at around $315 billion and planned to raise $37 billion, which would have been a world record.

“Under the guidance of regulators, we are focused on steadily advancing our rectification work and have no plans to launch an IPO,” Ant said on his WeChat account on Thursday evening.

Neither the CSRC nor China’s State Council Information Office, which handles media inquiries for central leaders, responded to Reuters’ request for comment.

Read also | World Bank lowers global growth forecast for 2022 to 2.9% from 4.1% in January

Ant wants to keep the IPO stimulus plans low key pending an official announcement, after catching regulatory attention in its first attempt in 2020 with the waves the offering created as the biggest shares float to the world, a separate source with direct knowledge of the matter said.

Chinese authorities shut down the IPO and cracked down on Ma’s business empire after he gave a speech in Shanghai in October 2020 accusing financial watchdogs of stifling innovation.

The IPO derailment marked the start of a regulatory crackdown aimed at curbing China’s huge tech sector, which has spilled over into other industries, including real estate and private education, wiping out billions in market capitalizations and causing layoffs in some companies.

As its economy slows in a politically sensitive year in which Xi Jinping is set to secure an unprecedented third term as party leader, Beijing is seeking to loosen its grip on private companies, including tech giants, to help meet a 5.5% growth target, which economists have said will be difficult to achieve given the COVID-19 lockdowns.

“They’re backtracking on their crackdown to offset the lockdown they’ve had. All the data coming out of China lately has been abysmal because of the lockdowns and the last thing they want to do is make this problem worse. At Over the next three to six months, we are likely to see the crackdown from China unfold,” said David Madden, market analyst at Equiti Capital in London.

A revival of the IPO could also mark a sort of rehabilitation for Ma, who has maintained a low public profile since the fall of Beijing.

FACILITATING EFFORTS

Chinese Vice Premier Liu He told tech leaders last month that the government supports the development of the sector and will support companies seeking to list on stock exchanges at home and abroad.

In another sign of Beijing’s softer stance, Chinese mouthpiece Didi Global, which has been under cybersecurity investigation since last year, is in advanced talks to buy a third of a vehicle maker state-backed electricity, Reuters reported on Wednesday.

The news of the talks comes after The Wall Street Journal reported on Monday that Chinese regulators were close to concluding their investigations into Didi, which could offer investors more hope for his takeover.

Bloomberg reported earlier Thursday that Chinese financial regulators have entered preliminary discussions on a possible relaunch of Ant’s stock market debut, without mentioning a timeline.

The top securities regulator had set up a team to reassess plans to sell shares, Bloomberg reported.

The regulator later said in a statement that it had not done any assessment or research work regarding an Ant IPO.

U.S.-listed shares of Alibaba, which owns nearly a third of Ant, fell 7% after rising as much as 7% in premarket trading according to the Bloomberg report.

US private equity firm Warburg Pincus, a big investor in Ant’s 2018 private fundraising, cut its valuation of Ant to around $180 billion at the end of March, from $221 billion a year earlier. , said a separate source.

Regulators have ordered Ant to restructure as a financials rather than a technology company, and sources and analysts said the financials sector generally has lower valuations.

Warburg Pincus declined to comment Thursday.

“The size of Ant and the IPO will need to be smaller than expected in 2020 as market conditions have changed and cannot be compared to today,” said Dickie Wong, chief executive. executive of Kingston Securities in Hong Kong.

U.S.-listed shares of Chinese tech and e-commerce firms, including Didi and Alibaba, gained this week on hints that Beijing’s year-and-a-half-long crackdown may be easing.

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