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A window is closing for Chinese financial technology giant Ant Group Co. to make a record public offering ahead of the U.S. presidential election, as regulators in mainland China and Hong Kong have yet to approve the plans for the company. Public.

Ant, the owner of the popular Chinese mobile payment network Alipay and the world’s most valuable startup, filed IPO documents with the Hong Kong and Shanghai stock exchanges in August. The company could raise more than $ 30 billion in concurrent offers and earn a market valuation of between $ 200 billion and $ 300 billion, the Wall Street Journal previously reported.

Ant, based in Hangzhou, China, a subsidiary of Alibaba Group Holding Ltd.

BABA 2.62%

, previously aimed to list its shares on both markets by the end of October, according to investors who were briefed by bankers working on the sale.

Some company insiders had also wanted to complete the IPO before the November 3 U.S. election, to avoid running into potentially volatile financial markets in the days and weeks that followed, according to people familiar with the matter. Tensions between the United States and China have also been high and could escalate depending on the outcome of the election.

Spokesmen for Ant have previously said there has never been an official timeline for her listing. A spokeswoman declined to comment on Friday.

It now seems unlikely, even though the Shanghai Stock Exchange in mid-September gave the green light to the ant listing plans. The Hong Kong Stock Exchange has yet to hold a hearing to determine whether the offer can be continued, and the deal must also be approved by the China Securities Regulatory Commission before Ant can begin selling. its actions on the continent.

Last month, a woman used an Alipay QR payment code at a Freshippo supermarket owned by Alibaba Group Holding Ltd. in Shanghai.


Photo:

Raul Ariano for the Wall Steet Journal

Ant will be the first Chinese company in a decade to be listed on both markets at the same time, and coordinating the two efforts is proving to be a complicated process. In Hong Kong, companies typically take around two weeks to go public from the time they make their offer after getting the green light from the stock exchange.

Even though Ants’ double IPOs will bypass the world’s largest stock exchanges in America and the company has very little business in the United States, the deterioration of relations between the two countries has placed Ant in the crosshairs of attempts. potential of the Trump administration to limit the company’s activities. Three major US investment banks are among the sponsors of the Hong Kong branch of the Ants IPO.

The US State Department recently proposed that Ant be added to the Commerce Department’s list of entities, which is designed to prevent companies from exporting sensitive technology overseas, according to a person familiar with the matter. News of the proposal has already been reported by Reuters.

The Entity List, essentially a commercial blacklist, restricts the export, re-export or transfer of technology and other items that include weapons. Dozens of Chinese companies are already on the list, including telecommunications giant Huawei Technologies Co.

A year ago, Megvii Technology Ltd., a Beijing-based facial recognition technology developer, was among eight companies that were added to the list. Megvii, in which Ant has a minority stake, was at the time preparing for an IPO in Hong Kong, which, like the Ant deal, was run by US banks.

The IPO was postponed after Megviis’ underwriting banks became lukewarm about the deal in light of the U.S. government ban, the Journal previously reported.

Chinese fintech titan Ant Groupco, founded by Alibaba billionaire Jack Mais, is set to go public in what could be one of the biggest announcements of all time. WSJ explains how Ant’s core service, Alipay, revolutionized payments and investing in the world’s most populous country. Composite photo: Crystal Tai

It’s unclear what security justification the United States would have for adding Ant to the entity list, but one of the concerns raised by administration officials, lawmakers, and analysts has been potential corporate access. Chinese to Americans’ personal information. Ants Alipay does not serve US consumers.

An interagency group made up of representatives from state, defense and energy departments and chaired by a trade official must review the proposal within 30 days of its submission. A majority of representatives must approve the proposal to add Ant to the list of entities.

Most of the ants’ business is in China, where Alipay has over a billion users and processed 118 trillion yuan, or $ 17.6 trillion, in payment transactions over the 12 months ending in June.

Last year, 5.5% of the 120.6 billion yuan in income of ants came from abroad, according to its listing prospectus. Ant has already scaled back its ambitions for expansion in the United States after a failed $ 1.2 billion bid for MoneyGram International Inc. which was blocked on national security grounds in 2018.

In 2016, Ant acquired Kansas City, Missouri-based EyeVerify Inc., which provides biometric verification technology, for an undisclosed amount.

In the United States, Alipay has links with Walgreens Boots Alliance Inc.

and other retailers to provide its network as a payment option to Chinese buyers with Alipay digital wallets linked to their bank accounts in China. It cannot be used by non-Chinese citizens outside of China.

Ant has not been made aware of any State Department proposals, and the company has had no interaction with U.S. government officials on these matters, according to people close to the company.

Martin Chorzempa, a researcher responsible for monitoring the Chinese financial sector at the Peterson Institute for International Economics, said that unlike the addition of Chinas Huawei and its subsidiaries to the blacklist, there were no accusations to his knowledge that Ant is said to have violated US laws.

It fits into the general pattern of wanting to sound really tough on China by taking symbolic actions that don’t have a strong negative effect but make a lot of noise, Chorzempa said.

Shaun Wu, a Hong Kong-based attorney at Paul Hastings LLP, said the Trump administration has increasingly shown its willingness to impose strict restrictions, if not bans, on Chinese tech giants by particular.

But there is no ban on US investors from buying shares in companies that are on the entity list, Mr Chorzempa said, adding that he does not think the threat of listing will deter them. . The ants’ upcoming IPOs have already garnered substantial interest from large U.S. investors into Asia, according to people familiar with the matter.

The banks handling the sale have had discussions with institutions that are considering subscribing for shares as part of the IPO, and five major asset managers in China recently closed new mutual funds that could invest until. ‘to six billion yuan in the Shanghai part of the offer. Millions of Alipay users have invested in these new funds.

Write to Stella Yifan Xie at [email protected], Jing Yang at [email protected] and Ian Talley at [email protected]

Copyright 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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