Ant Group to Refund IPO Investors Plus Fees and Interest

Chinese mainland retail investors who applied for Ant Group Co. Ltd.’s A-shares will get refunds after the fintech giant’s record initial public offering (IPO) in Shanghai and Hong Kong was suspended.

Underwriters will return the funds and brokerage commission fees plus interest to investors starting Saturday, Ant Group said Thursday in a statement. The money should be back in investors’ accounts by Monday, and the shares they subscribed for will be canceled Friday. The company promised Wednesday to refund investors who subscribed to the Hong Kong offering.

China’s securities regulator and the Shanghai Stock Exchange said they will work with relevant entities to ensure smooth and orderly refund payments to investors.

Ant Group’s $34.5 billion IPO, which was set to be the world’s largest ever, stoked a buying frenzy among investors. A record 1.55 million mom-and-pop investors subscribed to the Hong Kong half of the dual offering last week, putting up HK$1.3 trillion ($167.6 billion) for the shares.

Amid strong investor demand, financial institutions also raced to offer commission-fee waivers and cheap margin loans to compete for clients. A local newspaper reported that financial institutions in Hong Kong loaned as much as HK$519.2 billion to Ant Group IPO investors. Banks and brokers offered interest rates of 0.5% to 4% annually, leading to interest costs for investors totaling HK$36 million to HK$284 million for the five days before the scheduled debut, according to Caixin calculations.

On the mainland, more than 10 million retail investors put up 60 billion yuan ($9 billion) with five funds that were set to acquire 11.97 million yuan of Ant’s shares and invest the remaining assets in other internet and technology stocks and bonds. Some investors are asking for refunds while others are demanding removal of an 18-month lockup period to clear the way for redemption of their investments.

Operators of the funds are E Fund Management Co., Penghua Fund Management Co., China Asset Management Co., China Universal Asset Management and Zhong Ou Asset Management Co.

The China Securities Regulatory Commission (CSRC) asked the fund managers to fully consider the reasonable demands of investors, work out a feasible plan in accordance with law, and effectively protect the legitimate rights and interests of investors, the commission said Thursday in a statement.

On Tuesday, two days before Ant’s expected debut, the Shanghai Stock Exchange suspended its leg of the IPO, citing changes in the regulatory environment. That caused the company to suspend the Hong Kong portion.

The suspensions came shortly after Jack Ma, Ant’s billionaire co-founder and controlling shareholder, was summoned to a rare joint meeting Monday with the country’s central bank and three other top financial regulators. Details of the meeting weren’t disclosed, but the Shanghai exchange said the recent regulatory interviews and changes in the financial technology regulatory environment may result in Ant’s not meeting the conditions for listing or information disclosure requirements.

China released new draft rules Monday that would lay out tougher restrictions on online microlenders including Ant’s major profit-generating businesses Huabei and Jiebei, some industry insiders said.

Built on the foundation of Alipay, the payment platform that Alibaba set up in 2004, Ant Group has grown into a juggernaut that owns the world’s largest payment service and the biggest money-market fund platform.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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