Some professional investors who bought Ant Group stock in its $37bn (R585bn) initial public offering (IPO) are fuming that regulatory risks were not better flagged, especially given they had to jump through hoops to participate in the fintech giant's tightly managed road show.

China's suspension of the world's biggest float came at the eleventh hour after authorities published a consultation paper on Monday that recommended tighter rules for online microlending companies - which if implemented will require changes to Ant's business model and hit its growth prospects.

Ant did make disclosures about major regulatory risks in China in its prospectus and investors are expected to factor in a degree of regulatory uncertainty when making investments.

However, some fund managers who bought stock in the IPO say Ant did not do enough and they wonder how it could not have known that tighter regulations were in the offing.

"There was no mention of microlending regulation tightening; that [was] not a conversation that was had," one hedge fund manager in Hong Kong said of the road show.

"I don't think [investors] thought it was an issue until there was a last-minute discussion paper from the regulators," he added.

Ant said in a statement that it was not aware of the details of the draft on online micro-lending rules until it was published on November 2.

"Since Ant executives were unaware of the draft online micro-lending rules, they were not the subject of any road-show calls," it said.

Fund managers also expressed annoyance that Ant founder Jack Ma publicly criticised financial regulations as stifling innovation last month - a tactless move that many observers believe pushed regulators to suddenly ambush the Hong Kong and Shanghai dual listing.

"It strikes me that this issue could have been dealt with a long time ago. It seems that Jack Ma is being schooled in front of the class for the speech he made last week," according to another hedge fund manager in Hong Kong.

For some investors, the lack of detailed discussion on regulatory risk was particularly galling given what they say were unprecedented demands made by Ant for them to be allowed to participate in the road show, and its tight control over topics discussed.

Questions during the road-show calls - all online due to the pandemic - had to be submitted beforehand and Ant's management chose which ones they answered.

One fund manager also said he had to lodge documents outlining how the firm valued Ant, the length of time they intended to hold the stock, and present staff biographies for team members taking part in the call.

An Ant representative said the claims were untrue and it had not made such requests of fund managers during the road show.

Though some investors were upset, others, who also bought Ant stock, were not, saying the complaining reflected a lack of due diligence.



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