Ant Group, a China-based payments platform, is facing regulatory delays in its highly-anticipated initial public offering (IPO) amid growing unease over its handling of its share sale, the Financial Times (FT) reported.
The payments giant partly owned by billionaire Jack Ma is raising eyebrows through a deal in which investors were granted exposure to the upcoming IPO through five funds sold on Ant’s mobile app, Alipay, which was appointed the exclusive, third-party distributor, FT reported.
The expected $35 billion IPO, which will be listed in both Hong Kong and Shanghai, is still moving forward, but it has yet to win final approval from securities regulators in Hong Kong, according to FT.
Peter Alexander, managing director at Z-Ben, a Shanghai-based consultancy, told FT there is a "conflict of interest" regarding Ant’s arrangement with the fund managers.
“From an ethical standpoint, you’re using your own platform to raise money from your clients to invest in your own company,” he said, according to FT.
Ant dismissed the concerns in its response to FT, arguing that all the details have been fully disclosed.
“The newly established mutual funds that participated in Ant Group’s IPO as strategic investors … have been operating independently,” the company told FT in a statement.
However, Reuters reported that the delay in approval by securities regulators in Hong Kong is tied to Alipay’s role as the exclusive third-party distributor controlling access to the five funds.
Pushing back, Ant said in a statement to FT that it is making “steady progress in the approval processes in Shanghai and Hong Kong.”
The five funds in question have reported raising nearly $9 billion, according to FT, which identified them as China Asset Management, China Universal Asset Management, Zhong Ou Fund Management, Penghua Fund Management and E Fund Management.