A mascot of Ant Financial is seen at its office in Hangzhou, Zhejiang province, Sept 21, 2016. [Photo/Agencies]

Speculation swirls that internet finance giant to stall IPO to regain market share

Ant Financial Services Group said on Tuesday it has no timetable for an initial public offering, amid speculation that the internet financial giant is stalling a planned flotation to improve its performance and regain market share.

"We do not set a concrete timeline for the IPO," said the company in a text reply to China Daily.

Ant Financial－which owns a digital wallet service, a wealth management fund, and a micro loan platform,－is losing ground in the world's biggest digital-payments market and is therefore unlikely to conduct an IPO in 2017, reported news agency Bloomberg, citing sources with knowledge of the matter.

The sources said Ant Financial is rated poorly in an internal business review conducted by Alibaba Group Holding Ltd, after it lost significant market share to Tencent Holdings Ltd's rival WeChat Pay services.

The company is now focused on stemming losses in market share and improving internal controls before it proceeds in earnest with listing preparations, one source said.

The blockbuster listing, which was widely anticipated to take place as soon as this year, has now been put on ice until the end of next year at the earliest, the Financial Times reported on Tuesday, citing unidentified bankers.

Valued at $75 billion by CLSA Ltd, Ant Financial is counted on by market players and analysts as the star of this year's IPO calendar. It completed a record $4.5 billion equity fundraising round with a valuation at around $60 billion in June last year.

Ant Financial's Alipay held 55 percent of China's mobile payments market in 2016, down from 68 percent just a year earlier, according to iResearch Consulting Group. Meanwhile, Tencent's climbed from 21 percent to 37 percent from 2015 to 2016.

Such momentum is likely to extend into this year and beyond, with WeChat potentially overtaking Alipay in the years to come, said Li Chao, senior analyst at iResearch.

"It's not a wise choice to delay an IPO just for the sake of defending market share. The longer it takes (for the IPO), the more chances are that Alipay will lose ground to WeChat," he said.

Thanks to its ubiquitous messaging app with 889 million monthly active users, WeChat is dealing the heaviest blow to Alipay in offline payments via QR codes, which takes place most often in convenience stores and among individual merchants, Li noted.

The company's rapid expansion in internet finance has also increased the need for risk management. The central bank has urged Ant Financial to reduce the maximum amount individuals can invest in its money-market fund, to limit risks to financial markets, sources said on Monday.

Alibaba's Yu'E Bao－which this year overtook JPMorgan's US government money market fund to become the world's biggest money-market fund－will cut its current 1 million yuan ($145,000) investment cap by more than half after receiving input from the People's Bank of China, according to the sources.

Bloomberg contributed this story.