People & Money

Jack Ma loses $3 billion after Alibaba stock crash, Ant IPO delay

Chinese billionaire Jack Ma’s net worth tumbled by about $3 billion on Tuesday, according to Bloomberg’s Billionaire Index, as shares of his conglomerate – Alibaba Group – fell as much as 8% in New York, following news of a delay in the initial public offering of its financial services arm Ant Group.

Ma, who is currently still worth about $54 billion, has added more than $11 billion to his wealth since the year began and was widely expected to become Asia’s richest person with Ant’s IPO, which would have sent him up the wealth rankings. 

But the dual listings in Shanghai and Hong Kong, initially scheduled for November 5, were suspended on Tuesday, one day after Ma and two top executives of Ant were called in for “supervisory interviews” by Chinese regulators.

The sudden suspension is due to “major issues” that might cause the company “not to meet the listing conditions or disclosure requirements,” the Shanghai Stock Exchange said. Meanwhile, the Hong Kong offering was frozen soon after, Ant said in a statement.

Analysts however believe that the abrupt halt of the IPO, less than two days before trading was to begin, underscores the dominance of the Chinese Communist party over the private sector.

“The unprecedented intervention serves as a cautionary tale for Chinese entrepreneurs with lofty ambitions, even Communist Party members such as Ma,” Sherisse Pham writes on CNN Business. “It also means that even if Ant satisfies new regulatory requirements, its massive business will only move forward under the watchful eye of China’s strict regulators.”

According to Reuters, the government agencies told the executives that Ant’s “lucrative online lending business would face tighter government scrutiny” with the listing and could encounter new restrictions to its expansion. 

Ma owns 4.2% of Alibaba, which has a market capitalization of about $775.5 billion and owns about a third of Ant – valued at $27.4 billion (based on the IPO price). A former English teacher, the 56-year-old co-founded Alibaba with $60,000, and has transformed it into China’s largest e-commerce company.

Besides Ma, retail and institutional investors who were betting on a big first-day price surge based on the pre-IPO frenzy for the shares, also face uncertainty as it remains unclear if or when the offering will resume. But Ant has said that it would stay in “close communications” with regulators and the Shanghai exchange while investors would get a refund of “application monies” relating to the IPO.

The Ant share sale was expected to raise at least $34 billion, placing it ahead of Saudi Aramco’s $29 billion and Alibaba’s $25 billion public offerings as the largest in history. The widely anticipated deal attracted at least $3 trillion in bids or roughly 870 times oversubscription, as individual investors in China clamored for a piece of the pie. It would have created at least 18 billionaires including early investors and employees, reports say.

Ant Group is backed by other wealthy investors including Hong Kong’s Li Ka-shing, the family behind a French supermarket giant, the son of a Taiwanese real estate billionaire, as well as a Chinese retail, real estate, and mining tycoon Shen Guojun.

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