It was set to be the biggest IPO in the world, as investors around the globe were watching and waiting for the Ant Group’s entry into the financial markets, however its abrupt cancellation made headlines for weeks. Ant Group is a spin-off from Alibaba, and offers users an online finance option for loans, investments and much more. At $34 billion, the Chinese financial technology titan’s IPO had set the markets on fire with anticipation last year ahead of its potential entry into the Hong Kong and Shanghai markets, originally scheduled for November 5^th 2020. Then, in a twist of events, Ant Group’s plans came crashing down as its IPO was suspended. The cancellation came after an announcement from Beijing that changed the way micro lending in China would work, which would mean that Ant Group would need more capital in order to shift into more of the banking space, and less of the technology space, according to the experts. It was a devastating blow for the company, and indeed for many investors who had been anticipating the IPO. Fast forward over five months: what’s happened to the Jack Ma owned Ant Group, and will the IPO still happen?

Ant Group Goes Back to the Drawing Board

Jack Ma is the founder of Alibaba, an online store which rose to success after lowly beginnings in Ma’s apartment. Today, Alibaba is a Goliath in the tech space and has almost 800 million users. Alibaba is perhaps best known for its online shopping service, however the company also offers cloud computing and artificial intelligence to its millions of customers. Jack Ma then went on to create the Ant Group, which includes the Alipay finance app, widely used in China as a method of digital payment. He was on the verge of becoming the richest man in China, and then it all fell to pieces when Ant Group’s IPO was halted. Soon after that, Jack Ma mysteriously disappeared and wasn’t seen in public again until January of this year, when he released a short video address for a charity event. Christina Boutrup, an analyst in China who has interviewed Jack Ma before, suggested that Ma was simply keeping a low profile. Nobody knows for sure, however, the company has now had to undergo a restructuring in order to comply with stricter financial regulations, which involve turning Ant Group into a holding company. The company is now looking to regain some of the value it has lost by taking a bigger percentage of fees on the digital transactions done via the Alipay app. Some lenders have even been willing to let the fintech giant increase their processing fees by 80%, which is mostly due to the fact that the app is very necessary for certain businesses.

Will the Ant Group IPO happen?

A source told the Financial Times that “[The] Ant [Group] is still looking for an IPO and it wants to improve its valuation that has taken a hit from the regulatory overhaul,” so, in theory, it seems like Jack Ma is still focused on taking the Ant Group public. But in order to do that, the group first needs to refill its coffers, as the Ant Group lost about $315 billion in valuation after its IPO was abruptly halted. The subsequent restructuring has seen Simon Hu step down from the Chief Executive Officer role, and Executive Chairman Eric Jing step up to the plate. The company has a new financial services division which it is looking to investors to help fund so that it can be compliant with the new regulations. Jack Ma’s fintech titan is certainly not down and out, and Ant Group has received revised valuation estimates recently from the likes of Warburg Pincus LLC, who valued it at about $220 billion based on its 2020 earnings. The Wall Street Journal saw a memo to employees within the Ant Group which stated that the company would “certainly” go public. When this could happen remains unclear, but it seems as though the company is taking steps to comply with the new regulations, which could mean that a future IPO is on the radar.

Alibaba still shines

As an offshoot of technology behemoth Alibaba, the Ant Group is getting its fair share of attention, however until it’s made public, there is little investors can do. At the same time, Alibaba share trading prices have shown plenty of volatility over the past year—volatility which can present both opportunities and risks for traders who invest in shares as CFDs, or Contracts for Difference. CFDs allow you to take advantage of price movements in both directions—increases as well as decreases—of the share prices of top companies like Alibaba, without having to purchase the underlying asset (in this case any actual shares). So if you expected the price to rise, you’d open a ‘Buy’ deal or ‘Go long, whereas if you expected the price to fall, you’d open a ‘Sell’ deal or ‘Go short.’

Before you invest in shares with as CFDs, let’s look at what kind of volatility Alibaba shares experienced recently. Last year, just as the Covid-19 pandemic sent billions of people around the world into lockdown, share prices rose 79% between March 23^rd and October 27^th, however in the wake of the cancellation of the Ant Group’s IPO, share prices plummeted 30% by December 24^th. Then as the new year turned, Alibaba share prices rose 22% by February 16^th.

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