The suspended IPO of Ant is a “signal of the instances” and “not an remoted incident,” says investor Mark Mobius
The suspension of the IPO of the Ant Group (IPO) is a sign of the times, according to Mark Mobius, founder of Mobius Capital Partners.
Ant, a subsidiary of Jack Ma’s Alibaba, was slated for a double listing of $ 34.4 billion in Shanghai and Hong Kong last Thursday.
Ant operates Alipay, one of the most popular mobile payment systems in China. It also offers everything from asset management to microcredit and sells financial technology to businesses.
However, the fintech company’s IPO, which would have been the largest of all time, was abandoned at the last minute after Chinese authorities said the listing had “big problems”.
I think the Chinese government stepped in because they realized they need to regulate these companies so they don’t … get too big.
“The Chinese government is aware of the fact that it cannot allow these companies that dominate a certain sector, particularly the financial sector,” Mobius said on a virtual panel at CNBC’s East Tech West conference.
“I think the Chinese government stepped in because they realized they need to regulate these companies so they don’t … get too big,” he said, adding that other emerging economies have the same concerns. “A lot has to do with privacy and other factors.”
When asked if he thought Ant was an isolated incident, Mobius said “definitely not” and warned that the Chinese government might try to further regulate the tech industry.
“As you know, this sector has grown by leaps and bounds in China,” he said. “And now I believe the government is realizing that it cannot let this get out of hand because it will jeopardize the entire financial structure.”
Changing the world of payments
Douglas Flint, chairman of wealth manager Standard Life Aberdeen, said on the same panel that the suspension of Ant’s IPO shows the need for central banks and regulators to have control over financial stability.
He highlighted how many of today’s payments, money transfers, and investments had gone online.
“While this is good for consumers, and good for competition, and good for lowering brokerage costs, I think regulators and policymakers are getting nervous about the extent of the dominance that is possible,” he said. “I think there is a financial stability issue that led to the IPO being withdrawn.”
While China appears to have concerns that some companies are getting too big, it is keen to see others quickly scale up in different industries.
Fiona Frick, CEO of Asset Manager Unigestion, said on the same panel that China wants to become “more independent” in certain technology areas, citing the semiconductor industry as an example.
Going forward, she said her company was more positive in emerging markets, especially Asia, than in Europe. “They coped with their Covid crisis much better than we did,” she said, adding that she is particularly positive about the technology in these countries.