Ant probe zeroing in on who stood to gain from IPO

Mainland authorities are probing the speed with which Ant Group's ill-fated listing was approved, according to people familiar with the matter.

The investigation, being carried out by officials from multiple agencies, has for several months inquired into the process by which China's securities regulator approved the initial public offering, they said.

Among questions being explored by the probe are why Ant's IPO was fast-tracked, if the company made sufficient disclosures and whether it received preferential treatment in the allocation of its stock code.

The Wall Street Journal, which reported the probe earlier, said Beijing is also looking into what support local officials provided Ant and into big state-owned firms that stood to gain from a listing of Jack Ma Yun's financial technology giant.

The scrutiny points to the continuing fallout from the abrupt suspension of Ant's listing, days before a trading debut in Shanghai and Hong Kong last year. The derailment of what was slated to be the world's largest IPO marked the start of a sweeping crackdown on China's celebrated financial technology giants, which authorities have pledged to rein in this year.

Founder Ma has since kept a low profile, with regulators directing Ant to drastically revamp it business and hitting his crown jewel Alibaba with a record 18.2 billion yuan (HK$21.79 billion) fine for abusing its market dominance.

Shares of Alibaba rose 2.3 percent to HK$231.6 yesterday.

Ripples from the debacle are being felt at China's regulatory bodies. The securities watchdog last week unveiled plans to ban former staff from investing in pre-IPO companies. Beijing is also concerned that Ant's IPO stood to benefit a swathe of well-connected individuals and institutions, including state funds such as sovereign wealth fund China Investment Corp and insurer China Life Insurance.

Ma managed to get Ant's IPO application through various levels of securities regulators relatively quickly even as banking regulators were concerned about its business model and weighing tougher regulations for the company and its peers. One fallout from the probe has been a tightening of listing requirements at Shanghai's Star Market to ensure that only companies whose main business is technology are traded there.

China's financial regulators will continue to support Ant's listing once the probe is completed and the company overhauls its business, a source said.

The firm's transformation into a financial holding company that will effectively be supervised more like a bank could mean Ant will no longer be eligible to list on the Star Market.