Alibaba Group Holdings Ltd BABA-backed Ant Group is under fresh regulatory scrutiny as China is now probing how the ace entrepreneur Jack Ma won quick approvals for the stock’s initial public offering last year, The Wall Street Journal reported on Tuesday.
What Happened: Ma’s troubles seem to be far from over and his relationship with different stakeholders — regulators who gave the permissions for the initial public offering, local officials who showed support and the big state firms that could have gained from it — is now under scrutiny in a fresh central-government probe that started earlier this year, as per WSJ.
The WSJ report noted Ma managed to push the Ant IPO application in record time, clearing various layers of securities despite concerns from banking regulators.
The usually flamboyant Ma has been keeping a low profile since the IPO was halted last-minute in November. The billionaire entrepreneur isn't allowed to leave China until Ant completes a business overhaul ordered by regulators and the government’s investigation is over, as per the Journal.
See Also: Jack Ma's Ant Could See Valuation Drop To As Low As $29B With Changes Forced By Regulations: Report
Why It Matters: The new investigation casts a shadow of uncertainty over the future of Ant and controlling shareholder Ma. Ant’s lending business is driven by big data where its banking partners bear most of the risk and Chinese leadership is partly concerned it could endanger the country’s financial system. Beijing is also said to be worried that a coterie of well-connected individuals and institutions, some influential political families in China and big state funds could have benefitted from what would have been one of the biggest IPOs ever in the world.
Alibaba was earlier this month slapped with a record $2.8 billion fine by China’s regulators who after a monopoly probe found that the company had abused its dominant market position.
Alibaba had last year come under the Chinese regulatory spotlight after its co-founder Ma, the country’s most-famed billionaire, made comments that were critical of Chinese regulations at an event in Shanghai in October.
Price Action: Shares of Alibaba closed 01.38% higher at $235.92 on Tuesday.
Photo by Paul Kagame on Flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
