Jack Ma
Image: Getty Images AsiaPac / Protocol

The complicated reality of Ant’s stalled IPO

Protocol Index

Hello! This week: Why Ant's IPO might have been pulled, the changing trends of SPACs and Airbnb's impending IPO.

(Want Index in your inbox each week? Subscribe here.)


  • "Tremendous liquidity is driving the public stock markets to go up … which makes the late-stage investment environment more difficult." — Vision Fund CEO Rajeev Misra said the fund was increasingly focused on smaller bets in earlier stage companies.
  • "Those sponsors who are great but under-resourced are going to have a much harder time finding a company." — Asset manager Daniel Cohen told me that the proliferation of SPACs might require sponsors to invest more in the companies they take public.
  • "With these new rules, founders can get solicitations for people to invest in them, and if they get the investments then they can do the accounting work." — Wefunder CEO Nicholas Tommarello said new SEC rules on crowdfunding could give the sector a big boost.

The Big Story

Pulling Ant's IPO might have been the right move

When Ant Group's IPO was pulled by the Chinese government on Tuesday, all eyes — including mine — immediately went to Jack Ma's speech from a week earlier, in which he publicly criticized China's financial regulation. The suspension looked like a clear act of retaliation: China was showing Ma who's really boss. And that explanation certainly holds some truth.

But the reality is likely much more complicated. "I can't quite believe that [regulators are] so petty that they suspended the IPO simply because of Jack Ma's angry speech," Fraser Howie, co-author of "Red Capitalism," told me this morning.

  • Tanking a listing that was set to bring a lot of positive attention to China can't have been an easy decision to make and it's hard to believe that it's a decision made solely out of spite.
  • In fact, Howie suggested, Chinese authorities may have decided it was in fact necessary to step in to save investors' skin.

To understand what's really going on, it's important to look at draft regulations that China had been planning for weeks and finally published on Monday. Under the proposed rules, online lenders like Ant would have to make at least 30% of their loans themselves, rather than outsourcing them to other companies. That compares to a roughly 2% requirement today.

  • The change could have a huge impact on Ant's balance sheet: The Financial Times cites one anonymous expert who thinks Ant would need "an extra $20 billion or so in capital reserves" — more than half the amount Ant was set to raise. Another said the impact could be so big that Ant's valuation halves.

Ma apparently knew all about these new rules, even though they were only made public Monday. The FT reports that at the time of his speech, Ma was privately discussing the rules with regulators. And people across the fintech industry knew regulation like this was inevitable. "They did not write these regulations … [in] three days," Howie said.

  • So Ant appeared to know that huge rule changes were coming that would totally change its business, and it said … almost nothing. Its IPO filing does not describe the proposed changes in much detail, while Reuters reports that the company did not tell investors about the changes during its roadshow.
  • Ant executives "were presenting a picture of themselves which was not going to be a good representation of their business going forward," Howie said.

All that raises a big question: Was Ant trying to list before these new rules came into effect in an effort to achieve a higher valuation?

  • If that was the case — a big if! — then it suddenly becomes much clearer why regulators intervened to stop the listing. "If the company had listed, and then they changed the rules and you had this dramatic collapse in Ant's share price," Howie said, "the question that would have been asked is 'Why didn't the regulators do something earlier?'"
  • Pulling the listing may have been embarrassing, but maybe not pulling the listing might have been even more embarrassing.

The upshot? While some think the pulled listing might hurt investor demand for Chinese shares, the opposite could be true. "I don't want to give Chinese regulators too much credit," Howie said, "but I also don't want to just dismiss out of hand the fact that they've probably done a lot of investors a service."

  • We'll know for sure if they have been helped when Ant eventually returns for round two. If it ends up going public at a much lower valuation, investors might find themselves grateful — albeit at Jack Ma's expense.



Find out how cities will reimagine what growth means for everyone in today's digital economy. Mastercard's experts weigh in on the future of cities.

Read now.

Up to Speed

  • Monday: PayPal earnings beat expectations, but forecasts missed. Ocado earnings beat expectations, and it acquired two companies for $287M total. Coupa acquired Llamasoft for around $1.5B. Ping Identity acquired Symphonic Software. GDS shares rose on their debut. Aeva said it would go public via a SPAC at a $2.1B valuation. Alibaba was reported to be in talks to invest almost $300M in Farfetch.
  • Tuesday: Lenovo earnings beat expectations. Ozon filed for an IPO. Intel acquired Cnvrg.io. Microsoft invested in Bukalapak, reportedly at a $2.5B to $3B valuation. FAW invested in Pony.ai. Meituan was reported to be considering a second listing on ChiNext.
  • Wednesday: Qualcomm earnings beat expectations. Match Group earnings beat expectations. Expedia earnings beat expectations. Tech stocks soared.
  • Thursday: Alibaba earnings disappointed investors. Uber earnings missed expectations, but its outlook impressed investors. Dropbox earnings beat expectations. Roku earnings beat expectations. Square earnings beat expectations. T-Mobile earnings beat expectations. EA earnings beat expectations, but its outlook disappointed. Yelp earnings beat expectations. Peloton stock dropped on reports of delivery delays. Nintendo raised its profit forecast. ZoomInfo acquired EverString. GoPuff acquired BevMo. Kuaishou filed for an IPO. Vimeo raised $150M and said it's considering a spinoff. ByteDance was reported to be raising $2B+ at a $180B+ valuation.
  • Today: Pony.ai raised $267 million at a $5.3 billion valuation. Aveva said it would issue $3.7 billion in shares to fund its OSIsoft acquisition. Starling was reported to be raising $260M.

Coming Up

  • We might get our first look at Airbnb's financials: It plans to make its S-1 public as soon as next week, Reuters reports, with a listing planned for December.
  • Lyft reports earnings on Tuesday, followed by Cisco, Tencent, Palantir, Foxconn and Unity on Thursday.
  • Apple is reportedly set to announce its Apple Silicon Macs on Tuesday.
  • And maybe we'll finally know who won the election?

Thoughts/feedback/tips? Email me — shakeel@protocol.com — or tips@protocol.com. And subscribe to get Index in your inbox every week. Thanks for reading — have a great weekend, and see you next week.

Recent Issues