Alibaba Group Holding Limited (BABA) - Get Report shares slumped lower Tuesday after officials on the Shanghai Stock Exchange suspended the pending $37 billion listing of Ant Group, the world's biggest IPO.
The exchange said Ant's recent disclosure regarding regulatory changes in its key markets is a significant development that could mean it has failed to meet pre-set rules for providing timely information. The ruling follows reports that Ant Group's billionaire founder, Jack Ma, was summoned by government officials, as well as the People's Bank of China, to provide "views regarding the health and stability of the financial sector".
"Ant Group Co announces that it was notified by the relevant regulators in the PRC today that its proposed A Share listing on the STAR Market is suspended as the Company may not meet listing qualifications or disclosure requirements due to material matters relating to the regulatory interview of our ultimate controller, our executive chairman and our chief executive officer by the relevant regulators and the recent changes in the Fintech regulatory environment," the company said in a statement.
"Consequently, the concurrent proposed H Share listing on the Main Board of The Stock Exchange of Hong Kong Limited shall also be suspended," the statement added.
Alibaba's U.S.-listed shares were marked 5.9% lower in late morning trading on the Nasdaq to change hands at $292.49 each, trimming their six-month gain to around 53%.
Ant Group, a digital payments company founded by Ma in 2014, was set to list around 11% of its equity on both the Shanghai and Hong Kong stock exchanges later this week. Bookbuilding suggested the Hong Kong portion of the listing could value Ant Group at more than $300 billion. Alibaba purchased a 33% stake in Ant Group in 2018.
Ant Group's Shanghai-listed shares were set to be priced at 68.8 yuan ($10.26) each in a debut that will raise $17.23 billion. The Hong Kong-listed shares will raise another $17.24 billion.
Ant Group, best known for running the popular mobile-payment app Alipay, which has more than 700 million monthly active users, also counts China's National Council for Social Security Fund as one of its key investors, along with Singapore's powerful sovereign wealth fund, GIC, and the Canada Pension Plan Investment Board.