JD could withdraw Fintech Arm IPO amid regulatory crackdown: report

Chinese e-commerce major JD.Com Inc’s (NASDAQ: JD) The fintech unit, JD Technology, will likely withdraw its IPO application in the tech-heavy Shanghai star market amid China’s widespread crackdown on the vast online finance industry, Bloomberg Reports based on the South China Morning.

What happened: JD Technology, previously known as JD Digits, was renamed after absorbing JD’s AI and cloud business earlier this year. The pullout was influenced by China’s regulatory policy update, which blocked Jack Ma’s ambitious Ant Group Co IPO in November.

Chinese Communist Party recently prioritized data disclosure standards for research, e-commerce and social media by technology companies for the next five years to promote the healthy development of sharing and online economies. Beijing has also reportedly launched a platform for sharing public and government data.

JD Technology expected to raise around $ 3 billion (20 billion yuan) and may reapply in the future. JD.com shares lost 5% in Hong Kong on Monday.

Why is this important: China’s fintech industry has been made vulnerable since the introduction of new consumer lending regulations in November, leading to the abrupt suspension of Jack Ma’s Ant’s planned debut for $ 35 billion in Hong Kong and Shanghai.

Beijing launched a crackdown last November on alleged monopoly practices of its giant internet industry due to their growing influence through big data collection.

Regulatory crackdown has forced fintech companies to reconsider their IPOs and raise funds to comply with rules requiring online lending companies to provide 30% financing for loans. Previously, companies like Ant and Lufax Holding Ltd (NYSE: READ), the fintech branch of Ping An Insurance (Group) Co. Of China Ltd (OTC: PNGAY) (OTC: PIAIF) kept about 2% of their loans on their books.

JD Technology promoted its chief compliance officer to CEO last December to handle the growing regulatory crackdown.

Lufax, which went public in New York in October, had warned investors about its plan to increase the ratio of lending risk with lending partners to 20% from 2% due to regulatory trends. The stock has lost nearly 13% since February 16. However, it is currently trading 12.7% above its IPO price.

Price action: JD shares are trading down 3.92 to $ 87.16 during the pre-market session last check Monday.

Image courtesy: Wikimedia

See more Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Previous Study reveals inequalities in lending in predominantly black neighborhoods
Next Borrower Beware: The First False Claims Act PPP Loan Fraud Regulation Announces More | Man's pepper with trout