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Ant Group had anticipated raising up to $35 billion in a dual listing in Hong Kong and Shanghai stock exchanges.
In a bid to rescue and salvage the world’s largest IPO, Jack Ma is reported to have offered Beijing part of Ant Group to appease the contentious relationship. “You can take any of the platforms Ant has, as long as the country needs it,” Mr. Ma proposed to the Chinese regulators.
Meanwhile, the Chinese regulators have not responded to the offer but people close and familiar with the matter indicates the odds of nationalizing at least parts of the company are not zero.
Furthermore, the country could not be fighting its own tech companies while they receive immense pressure from Washington over security matters.
Alibaba and Ant Group Market Perspective in Regards to the Offer by Jack Ma
Shares of Alibaba Group Holding Ltd (NYSE: BABA) have been on the receiving end lately. Having closed at $260 on Friday, 1.68% down, BABA shares were trading approximately $257 during Monday’s pre-market, 1.07% down.
Alibaba is said to control approximately 33% of Ant Group thus a major shareholder. Ant Group had anticipated to raise up to $35 billion in a dual listing in Hong Kong and Shanghai stock exchanges.
However, Ma is reported to have publicly criticized the Chinese government on not only slowing the technology innovations but also pulling down existing established infrastructures. His remarks are said to have attracted President Xi Jinping‘s attention, which in turn led to the IPO being stopped.
Alibaba through Ant Group owns China’s largest digital payment platform Alipay, which serves over one billion users and 80 million merchants. The Chinese government through the Central Bank is currently in a process to roll out its digital Yuan, largely seen as a competitor to the Alipay ecosystem.
As the global economy recovers from the ongoing coronavirus pandemic, amid new wave of infection, China is working diligently to have technical infrastructures in place that can help the economy not only recover but also run smoothly.
China has been working on a project to have global blockchain projects interoperable. In addition, the country has significantly adopted blockchain technology and artificial intelligence technology to help it remain on top of other countries, particularly the United States.
If the Chinese regulators accept the Alibaba offer, Ant Group and it’s parent company could get further scrutiny from the United States. The Chinese interference with the company’s operations could make other countries reluctant to adopt its products. As a result, to some extent the interference could damage Alibaba and Ant Group global reputation among investors.
Alibaba shares are up approximately 22.58% year to date according to the market data provided by MarketWatch. However, they are down approximately 5.05% and 3.74% in the past three months and one month respectively.