over 3 years ago • 2 mins
Ant Group – China’s leading mobile payments firm – had already raised $37 billion from institutional investors, and it was all set to list its shares on both stock exchanges on Thursday in what would’ve been the world’s biggest-ever IPO.
That is, until Chinese regulators asked to meet Ant Group bosses 🏢 See, while the company had already flagged that the IPO would have to navigate certain regulatory risks, this summons might’ve been one risk too far: both stock exchanges hit the pause button, pointing to (unspecified) regulatory changes.
This will sting: there’s been so much demand for Ant Group’s shares among institutional investors that the company stopped taking orders sooner than expected. That demand was partly because Chinese investment managers see the shares as a must-have, but also because its stock will likely get another boost when it joins the major stock indexes 📈 The investment funds that track those indexes will, after all, immediately buy in too – and that’s to say nothing of all the retail investors who want its shares. Little wonder, then, why some investors thought Ant Group’s share price might’ve doubled when it “went public”.
It’s worth keeping in mind that a stock’s rise on the first day it’s traded – which is an average of 18% in the US – mostly benefits the major investors who bought in before the stock became publicly available 🤔 That said, it’s not particularly easy to buy new shares before they start trading publicly – and even if you get in on day one, 60% of IPOs end up trading below their initial price five years down the line anyway.
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