© Reuters. FILE PHOTO: An Ant Group logo is depicted at the company's headquarters, a subsidiary of Alibaba, in Hangzhou
By Humeyra Pamuk, Alexandra Alper and Karen Freifeld
WASHINGTON (Reuters) – The Trump administration has made an effort to get blacklisted Ant group Co Ltd. (HK 🙂 (SS :), the Chinese financial technology company affiliated with the e-commerce giant Alibaba Four people familiar with the matter said after a phone call between a company executive and a senior US government official. Reuters reported last month that the U.S. Department of State tabled a proposal to blacklist Ant Group to deter U.S. investors from participating in its IPO, which is expected to reach a record $ 37 billion (Jan. Billion pounds sterling) before they move on Tuesday.
But the Commerce Department, which oversees the blacklist, put the proposal on hold after Alibaba Group Holding Inc. (HK 🙂 President Michael Evans asked Commerce Secretary Wilbur Ross to decline the offer in a phone call, people said and declined it from being called because they were not authorized to speak on the matter. Three of the respondents said fears of fighting Wall Street ahead of Tuesday's presidential election and the possibility of a lawsuit convinced Ross to overturn the plan.
"It could stimulate legal action or cool the markets," said one of the sources. In contrast, the fourth person said Ross took into account the fact that the Alibaba (N 🙂 platform Taobao is already on the U.S. sales agent's infamous markets list due to concerns that it may contain some counterfeit goods. This means that the U.S. government is already under scrutiny, the person pointed out, stressing that Ross' decision was not a result of a phone call or market, election or legal concerns.
Ant and the State Department declined to comment. Ross and Evans could not be reached for comment.
Ant is China's leading mobile payments company, offering loans, payments, insurance and asset management through mobile apps. It is 33% owned by Alibaba and controlled by Alibaba founder Jack Ma.
Inclusion on the trade blacklist, known as the entity list, forces a company's US suppliers to obtain special licenses before selling. It doesn't stop US investors from buying their stocks, however, and its impact on a fintech giant like Ant would likely have been largely symbolic.
Ant's Alipay payment app is currently unavailable to American users, according to a company spokesperson. However, China hawks in the Trump administration fear access to confidential banking information of future US users.
Donald Trump's administration has recently shown reluctance to assert itself against Beijing ahead of Tuesday's elections. Polls show incumbent Republican Joe Biden lagging behind Democratic rival Joe Biden by double digits across the country.
In September Commerce tempered an offer from the Department of Defense to add China's top chipmaker SMIC to its list of companies, instead instructing the company's U.S. suppliers to obtain licenses before certain high-tech items are shipped.
With the spread of the coronavirus, which originated in China last year, and Beijing's crackdown on freedoms in Hong Kong, Trump had stepped up action against Chinese companies like Bytedance, which owns the social media app Tiktok, earlier this year.
However, a move by the Trump administration to ban certain US transactions with the Chinese owners of the messaging app WeChat and TikTok was held up in court. Investors had largely allayed concerns about the Ant Group, bidding for a record $ 3 trillion on its shares before China suspended the Ant Group listing. This resulted in a dramatic move with investors and bankers looking for answers.
The Hong Kong leg of the IPO was sponsored by China International Capital Corp. Citigroup (NYSE :), JPMorgan (NYSE 🙂 and Morgan Stanley (NYSE :). Credit Suisse (SIX 🙂 works as a joint global coordinator. Goldman Sachs (NYSE 🙂 is also involved.