People walk past the Ant Group Co mascot displayed at the company's headquarters in Hangzhou, China, on Sept 28, 2020.
(QILAI SHEN/BLOOMBERG)
Hong Kong retail investors — a fifth of the city’s population who had scrambled for a slice of what would have been Ant Group’s record H-share initial public offering — are set to have their interest payments, as well as subscription and commission fees, waived entirely or in part to cushion the loss from the abrupt suspension of the company’s market debut.
Mainland tech giant Tencent-backed Futu Securities and Bright Smart Securities, two of Hong Kong’s major brokerages, said on Wednesday they’ll bear all the costs incurred by the putting off of Ant Group’s US$35-billion IPO and make refunds to mom-and-pop investors in Hong Kong. Other brokers, including Forthright Securities, Huasheng Securities, uSmart Securities, Eddid Securities and Futures, have also made a similar pledge.
Regulators on Tuesday slammed the brakes on Ant Group’s dual listing in Shanghai and Hong Kong on Tuesday, citing “significant changes” in the regulatory environment of the fintech behemoth
Regulators on Tuesday slammed the brakes on Ant Group’s dual listing in Shanghai and Hong Kong on Tuesday, citing “significant changes” in the regulatory environment of the fintech behemoth.
ALSO READ: Ant Group's US$37b listing suspended in Shanghai and HK
It’s not the first time that the SAR has seen a flotation being abruptly halted on the eve of a stock market debut. The most recent high-profile cases involved a handful of sizeable IPOs, including that of Belgian brewer Anheuser-Busch InBev, which had been put off and relaunched as violent protests in Hong Kong unnerved investors last year.
Previously, investors would have the principal sum refunded but still have to pay the interest on margin lending and even miscellaneous fees. Edmond Hui, chief executive of Bright Smart Securities and Commodities Group, believes that such a practice is rather unfair, especially when the Hong Kong leg of Ant Group’s flotation has garnered unprecedented interest from almost 1.55 million retail investors, with the most amount of money frozen in the city’s history.
The Hong Kong tranche drew HK$1.3 trillion (US$168 billion) in bids, or 389 times the amount of shares on offer. The huge frenzy for Ant Group’s shares is backed by massive lending by financial institutions.
ALSO READ: Fin or tech? China's Ant says it's a tech firm not a bank
However, local banks appeared to be more reluctant. CMB Wing Lung Bank said on Wednesday the margin lending interest will be waived. But Bank of China (Hong Kong) and HSBC, both of which offered a combined HK$200 billion margin lending with ultra-low interest rates for Ant Group’s listing, appeared to have no plans to waive interest.
Edward Au, Deloitte China’s managing partner for the southern region, said mainland regulators may tighten their grip on consumer credit and introduce the new rules that required Ant to put off its IPO.
“If the change in rules will put the compliance of Ant’s business under question and sustainably impact its future growth, then we may need to take a new look at the business rationales and the company’s valuation will be inevitably affected. It may take a longer time for Ant to relaunch its listing,” he said.
READ MORE: Ant said to trade at 50% premium in HK gray market
