The record-setting US$37 billion IPO of Ant Group (formerly known as Ant Financial or Alipay) on the Shanghai Stock Exchange was supposed to be the capital market’s 2020 grand finale. Yet the finale — which was originally scheduled for today — was abruptly halted  when China’s regulators “invited” Jack Ma, Ant Group’s co-founder and helmsman, and other execs for a conversation less than two days before the stock debut. 

Ant Group’s initial public offering — which was slated to debut simultaneously on the Hong Kong Stock Exchange and anticipated to be the biggest in history — may now be delayed by at least a half year before the listings resume. 

Chinese regulators’ sudden interference came as a surprise to many. Until this week, Ant’s IPO journey had been smooth and efficient, taking less than a month to get green lights from all major government departments. 

Then why, all of the sudden, did China’s regulators change their minds? 

One reason could be Jack Ma’s speech on Oct 25th during Bund Summit, a high-profile conference in Shanghai where he publicly denounced China’s current banking system as overly regulated. In his speech, he also questioned whether traditional financial regulations needed to be re-evaluated. 

See related article: Chinese tech titan Jack Ma: digital currencies may be wave of future

The billionaire influencer and founder of internet giant Alibaba, which spun out Ant as an affiliate in 2011, even compared traditional banks to “pawn shops” whose only operation is lending and borrowing.

If Ma’s speech had been said in another context, Ant’s IPO might have continued as is. But Bund Summit is a financial forum that is well-attended by traditional banking executives as well as regulators. Ma, who called for the oldies to reform, might as well have slapped those attendees’ faces in front of an important crowd. 

But beyond upsetting the traditional banks and regulators, Ma also upset the public. For many, Ant Group could not have grown into today’s behemoth without the Chinese government’s “half-opened eyes,” meaning that regulators, until now, had never intended to seriously regulate Ant. 

Ant is the company behind Alipay, one of the two most popular digital payment platforms in mainland China, a society that is increasingly going cashless. Ant is also a global blockchain technology powerhouse that claims to have more blockchain-related patents than any other company since 2017. 

In China’s business world, Ant was long viewed as a favored child. Ant’s most lucrative business is its consumer credit business. Its business model is to lend money to consumers, in the form of microlending and payday loans, and then securitize these loans as asset-backed-securities and raise money from banks. It’s a matchmaker.

As a favored child, Ant barely had trouble receiving regulatory greenlights to securitize its assets, an essential approval for its asset to snowball for the last few years. When Beijing saw the snowball, it naturally wanted to contain it in case of casualty. As a result, Beijing issued new rules to cap the use of asset-backed securities to fund quick consumer loans, which will force Ant in particular to contract its microlending business. The new regulation limits that sort of funding to four times a firm’s net assets, while Ant currently has 4.7 times such debt against its capital.

Obviously Ma wasn’t happy with such an arraignment and did not hesitate to voice his concern during the recent Shanghai Summit. And the public reacted with outrage as many consider Ma too arrogant to be considered an ethical business leader. 

Now that Ant’s IPO is halted, many believe that Ma is also tamed. But is Ma, whose name literally means “horse” in English, really tamed? Or is this just a temporary solution to calm the public’s rage? 

It could work both ways. From a short term perspective, it eases the public’s rage. But from a long-term perspective, the regulator’s harsh stand also shows other fintech giants that the old days of friendly, “half-opened eyes” regulations may be gone. The government appears determined to clean up the fintech mess, especially those that are highly leveraged. The next one could be you.