Ant Group’s IPO which was supposed to raise $34.5 billion and which would have set the record for the largest IPO ever has been suspended. According to a spokesperson for Ant Group, the suspension is a result of regulatory concerns and the company is working through the concerns with the Hong Kong and Shanghai Stock Exchanges.
Ant Group’s Executive Chairman, Eric Jing, Controller, Jack Ma, and CEO, Simon Hu, were summoned by China’s financial regulators on Monday. Reuters reported that the trio was told that Ant’s online lending business will be facing ‘tighter scrutiny’.
The suspension came as a rude shock to Ant investors and the companies related to it. Alibaba Group Holding, which owns about a third of Ant, dropped 9% in early U.S. trading. The drop in Alibaba’s shares corresponds to about a drop of $76 billion in value, which is more than twice the $34.5 billion Ant Group planned to raise with the IPO.
While Ant Group’s IPO is the largest to be suspended so far, it is not the first to be cancelled. Here is a list of other companies that have had their initial listings cancelled or suspended and how they are faring currently.
WeWork was supposed to raise $4 billion by selling enough shares in an initial public offering (IPO) in October.WeWork’s parent company, We company, had even secured a $6 billion bank loan that was contingent on the successful execution of the IPO.
WeWork cancelled its IPO after investors raised issues about the company’s valuation and corporate governance arrangements which they claimed gave its founder, Adam Neumann, too much control. Following the cancellation, the company raised money in a $9.5 billion deal that gave Soft Bank Corp majority control of WeWork.
WeWork is one of the portfolio companies of SoftBank Group of which Jack Ma was a board member until April. WeWork’s operations have greatly been affected by the Covid-19 outbreak and the startup has continued on its downward spiral since.
#2 Bitmain Technologies
Bitmain Technologies is a product designer for mining cryptocurrency. The company applied for an IPO of $3 billion in Hong Kong in March 2019. It was, however, cancelled because of concerns about price instability, high-profile hacks and failure of company infrastructures.
The company later reportedly filed for another IPO in the US with the Deutsche Bank as its sponsor.
Earlier this year, the company reportedly lost 10,000 bitcoin mining ASIC hardware called Antminers, in its facility in Mongolia. The Antminers are worth about $10 millions and were “illegally transferred” from the facility. Bitmain’s co-founders, Jihan Wu and Micree Zhan have been at loggerheads for some time now and Wu claimed that Zhan’s allies in the company stole the Antminers.
The founder’s feud started in October 2019 when Wu ousted Zhan while the latter was away at a business meeting and threatened to terminate the appointment of any staff that followed Zhan’s directives. Zhan forcefully reclaimed his position at the company’s headquarters in China. However, each founder claims that the other is not a part of the company and this has created a fracture within its operations and staff.
Ferretti, an Italian company that makes yacht, offered 30% of its shares in a public listing in October 2019. The deadline for the initial IPO was extended from October 10 to October 15 because of weak demand for the company’s shares.
The extension was, however, not enough to save the IPO and the initial stock offering was pulled from the market when the price did not increase.
The indicative price range for the IPO had been set at between 2.5 and 3.7 euros per share. This valued the company at between 727 million and 1.076 billion euros with the issuance of the new shares. At the time of the IPO, some of the investors considered the share price too high.
#4 Property Guru
Southeast Asian property listing company, Property Guru cancelled its IPO which was supposed to raise $260 million. The IPO was filed with the Australian Securities Exchange and later called off due to concerns of market volatility.
The offering was led by Credit Suisse and UBS and had received backing from global and Australian investors. However, the decision to pull the plug on its listing was, according to experts, based on the then “current IPO market sentiment” which the company took into account.
The listing would have valued Property Guru at A$1.2 billion while the A$380 million in proceeds would have been used to fund the company’s expansion into new business segments.
About a year later in September 2020, it received an investment of $220 million from its existing investors; KKR and TPG.
#5 Swiss Re
Swiss Re launched an IPO for ReAssure, its UK life insurance business and cancelled it just a week before the shares start trading. According to the company, there had been heightened caution and weak underlying demand from institutional investors.
At the time of the cancellation, Swiss Re said that while it wanted ReAssure to have a more diversified shareholder base, there was no pressing need for it to divest shares at a price it considered to be below the company’s value and future prospects.
The price range for ReAssure’s shares had been set at between 280 to 330 pence per share. This gave the company a market capitalization of GBP 2.8 billion to GBP 3.3 billion.
#6 Mota Engil Africa
Portugal’s largest construction company, Mota Engil, had plans to float 25% of the share capital of its African subsidiary, Mota Engil Africa, in an IPO in 2014. The listing was scheduled to happen on the London Stock exchange but the plan was postponed due to unfavourable market conditions and the impact on investor sentiment.
Mota Engil Africa went on to form Mota Engil Nigeria with Shoreline Group in a bid to tap into the construction prospects and rise in oil prices in Africa’s largest economy. It owns 51% of the new company, making it the major shareholder. Shoreline Group owns the remaining 49%.
Most of the IPOs that were scheduled on bourses in the UK were cancelled due to bad market conditions that were amplified by the uncertainty around Brexit. The tensions around the exit of the UK from the European Union caused UK-focused companies like Swiss Re and Mota Engil to receive discouraging receptions from investors at the point of an IPO.
Unlike the companies that cancelled because of bad market conditions, Jack Ma’s Ant Group has been forced to suspend its own IPO because of Beijing’s concerns over non-financial institutions rendering financial services. The company said in a statement that it is working with the regulators to ensure compliance with regulations.
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