Alibaba refrains from quantifying impact of Ant Group’s suspended IPO
Alibaba Group Holding Ltd (HKG:9988) today announced its financial results for the quarter ended December 31, 2020. Much of investors’ attention is devoted to any updates that the company has to provide regarding the investigation recently launched by the Chinese authorities, as well as the financial impact of the suspended IPO of Ant Group.
Today, Alibaba confirmed that, on December 24, 2020, it received a notice of an investigation from the State Administration for Market Regulation (SAMR) that it had commenced an investigation pursuant to the PRC Anti-monopoly Law.
Alibaba said:
“The investigation is ongoing and we are fully cooperating with the SAMR. We have established a special taskforce with leaders from our relevant business units to conduct internal reviews. We will continue to actively communicate with the SAMR on compliance with regulatory requirements. We will further update the market when the investigation is concluded”.
Alibaba also provided an update on Ant Group, although it refrained from quantifying the impact of the suspended Ant Group IPO.
On November 3, 2020, Ant Group announced the suspension of its proposed dual listings and initial public offering on the Shanghai Stock Exchange STAR board and the Hong Kong Stock Exchange. Due to recent significant changes in the Fintech regulatory environment in China, Ant Group is in the process of developing its rectification plan, which will need to go through the relevant regulatory procedures, Alibaba said. Therefore, Ant Group’s business prospects and IPO plans are subject to substantial uncertainties.
“Currently, we are unable to make a complete and fair assessment of the impact that these changes and uncertainties will have on Alibaba Group. We will update the market once Ant Group has completed the relevant regulatory procedures for its rectification plan”, Alibaba said.
Let’s recall that, in January this year, Nikkei reported that Ant Group, the parent company of China’s largest digital payment platform, Alipay, is considering a shift to a financial holding company structure.
Referring to a source with knowledge of the situation, Nikkei explained that the move is set to bolster transparency at the behest of Chinese regulators. Ant Group’s loan intermediary business and sales of mutual funds and insurance are poised to become subsidiaries of the holding company, with Ant to be the parent. The restructuring would also cover MYbank and likely Tianhong Asset Management.