Bloomberg
The restrictions on China Fintech that hit Ant were no surprise: Ping An
(Bloomberg) – The restrictions on China’s fintech that prevented a massive sale of shares by Ant Group Co. have been under consideration for years and have not come as a surprise to those in the industry, according to an executive at China’s largest insurer for value of Marketplace. Like Ant, Ping An Insurance (Group) Co. was in the middle of planning a public listing for a fintech unit when regulators began issuing a barrage of rules to curb the country’s burgeoning online lending sector. Its Lufax Holding Ltd. debuted on the New York Stock Exchange days before the most comprehensive checks were revealed in November, closely followed by the abrupt suspension of Ant’s initial public offering. and led to deep cuts in assessments, industry participants predicted, Jessica Tan, co-executive director of Ping An, said in an interview. Tan, 43, oversees Ping An’s technology units, including Lufax and OneConnect Financial Technology Co. “Chinese regulators don’t suddenly launch a regulation on you and say ‘we will do it’,” said Tan during a visit to his city Christmas, Singapore. “Each regulation that has been announced is not a surprise to any of us, including Ant. Ant knows these regulations too. ”Despite the warnings, global investors and bankers were taken by surprise when the authorities derailed Ant’s planned initial $ 35 billion public offering on the eve of its listing, pointing to a change in the regulatory environment. The IPO created a frenzy, with orders reaching $ 3 trillion and shares in the gray market being traded at a premium of 50% over the offer price. to finance loans. “These regulations have been discussed for the past two years, so we all know them,” said Tan, citing warnings in Lufax’s public offering documents. “For us, we have already complied with the regulations, so we don’t expect any changes.” Lufax WarningLufax warned in its prospectus that China’s retail credit and wealth management sectors “may not develop as we anticipate” and regulatory structures “Remain uncertain for the foreseeable future.” During a roadshow ahead of the listing in October, the company said it planned to increase the proportion of loan risk it carries with credit partners from 2% to 20% due to potential regulatory demands, known people The proposed rules for online microloans announced on November 2 required platform operators to provide at least 30% of financing for loans granted jointly with partners, including banks. Ant’s IPO was discontinued the next day, just two days before the planned listing in Hong Kong and Shanghai. Ant, Jack Ma’s fintech giant, was not aware of the draft regulation until it was published to solicit public comment, the company said in an emailed statement. The company had fully disclosed in its prospectus all known material risks, including those related to possible regulatory changes, said Ant. The document carried extensive warnings about China’s “highly complex and continuously evolving” regime and also outlined Ant’s response at the time of drafting rules on financial companies that would be subject to further scrutiny. China’s regulatory constraint continues to weigh on its fintech sector as more rules are implemented. Authorities announced new requirements for co-loans last month, limiting the deal to no more than 50% of banks’ outstanding loans. New York shares of both Ping An units plunged last week, joining a technology sale. As price movements show, “investors are still concerned about regulatory tightening,” said Kevin Kwek, an analyst at Sanford C in Singapore. Bernstein. While the latest rule has a greater impact on Ant due to its size, “investors generally expect the tightening to be not yet completely over.” Last month’s requirements for online loans were released only after officials “fully” sought feedback from various types of financial institutions, which widely recognized changes to the rules, the banking regulator said last week. The agency will continue to close loopholes in its regulatory system to better prevent risks, she said in a statement on its website. Lufax, once one of China’s largest peer-to-peer lenders, was forced to become a financial giant offering wealth management and retail lending after Chinese authorities launched a strong crackdown on the P2P sector three years ago. behind. Profit JumpLufax reported a 17% jump in fourth quarter profit as fiscal expenses fell, even after cutting loan rates for borrowers to comply with the relevant new rules. He also gave guidance for a 48% increase in net income in the first quarter over the previous three months. Ping An, based in Chenzhen, has been growing in other parts of Asia and beyond. OneConnect Financial has expanded to 14 countries, most recently in Abu Dhabi, Philippines and Malaysia. The company is looking to hire about 100 people in Southeast Asia, adding a team of 400, after revenue grew by about 40% last year, she said. “The big trend is for all financial institutions to spend more and more on technology,” said Tan, who built the fintech unit about five years ago. OneConnect will help bridge the gap with software and innovation for companies that are not able to do everything themselves, she said. (Updates with regulator comments in 15th paragraph) For more articles like this, visit us at bloomberg.comSubscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP