China’s fintech giants scramble to rethink IPO strategy, fundraising

BEIJING: Jack Ma’s vision of the future of finance in China is being upended by regulators, along with the ambitions of conglomerates that followed his lead.

Ma’s Ant Group Co. is in talks with regulators about injecting capital into its microlending units just weeks after its $35 billion initial public offering was halted in a sectorwide crackdown. The listing plans of e-commerce billionaire Richard Liu’s JD Digits Technology Holding Co. have also been thrown into limbo. Lufax Holding Ltd had to renegotiate terms with some shareholders after its recent IPO valued China’s largest listed online lender at less than a previous funding round.

The details come from people familiar with the discussions, who asked not to be identified speaking on private matters.

It’s all part of the rapidly shifting landscape for China’s fintech leaders, which till recently offered the most compelling evidence of technology giants using their might—and a light regulatory touch—to rewire traditional financial services. They are now rushing to shore up capital, mulling business overhauls and bracing for more turbulence as industry watchdogs set their sights on areas spanning lending, banking partnerships and data privacy.

“Financial stability is political in China,” said Sean Ding, a Washington DC-based analyst at Plenum, a research firm specialising in Chinese politics and economy.

“The whole point of sending such a strong message is for future fintech companies to be more careful, understand that their products can bring about financial risk,” said Ding.

The call for tightened oversight comes from the very top. Chinese President Xi Jinping urged financial regulators to “dare to” master their supervisory role, according to commentary penned by an official at the banking regulator, published in the Party mouthpiece People’s Daily this month.

And it’s the $1.2 trillion online lending industry that’s been first in line for a shake-up, with many companies already trying to meet stringent rules that are yet to be finalised.