The path to an initial public offering for Alibaba’s fintech arm, Ant, has faced a series of hiccups including the latest U.S. signals that Washington could be primed to delay its listing.

Republican senator Marco Rubio called for the Trump administration to take a «serious look» at delaying Ant Group’s IPO which is planned for a dual listing in Hong Kong and Shanghai.

«It’s outrageous that Wall Street is rewarding the Chinese Communist Party’s blatant crackdown on Hong Kong’s freedom and autonomy by orchestrating Ant Group’s IPO on the Hong Kong and Shanghai stock exchanges,» according to a «Reuters» report citing a statement from Rubio. «The Administration should take a serious look at the options available to delay Ant Group’s IPO.»

The Hong Kong-based IPO is being sponsored by China International Capital Corp, Citigroup, JPMorgan and Morgan Stanley with Credit Suisse working as a joint global coordinator. Goldman Sachs is also involved in the deal.

Dual Blacklisting

Rubio’s statement follows reported discussions in the White House to explore restrictions not only on Ant but also Tencent in an effort to preempt perceived national security risks linked to Chinese payment systems.

In addition to exposing U.S. investors to Chinese fraud which has seen a recent rise – most notably, the Luckin Coffee scandal – the primary concern expressed was Chinese government access to sensitive banking and financial data belonging to hundreds of millions of individuals including American citizens.

The discussions were held on September 30 in the «White House Situation Room» between senior administration officials, «Bloomberg» reported last week.

Sanction Risk

«These digital payment systems are the source of well-founded national security concerns, and the Trump administration should move to protect American users’ sensitive financial data as quickly as possible,» Republican representative Jim Banks said in response to a question about sanctions as a consideration for the administration.

Although it remains to be seen if sanctions would dent Ant’s fundraising target of $35 billion, which would value it at around $250 billion, it would most definitely disrupt its sponsors – Citigroup, JPMorgan Chase and Morgan Stanley – and their considerations for compliance risk.

According to a separate «Bloomberg» report citing unnamed sources, the three American banks alone are believed to be able to raise $17.5 billion.

Interrupted Ant March

Reported concerns about potential fraud linked to Ant shares were already emerging before a listing, aimed for as early as the end of this month. In September, a Chinese private equity firm was accused of cheating investors by selling heavily discounted unlisted shares of Ant to relatives. Former Greater China chairman of Goldman Sachs and co-founder of Primavera Capital Group Fred Hu Zuliu was spotlighted after being publicly accused of selling discounted shares to his own siblings. 

«We believe that the IPO should, at a minimum, be delayed to ensure that [...] disclosures are faithfully done and properly evaluated,» according to a letter last month to President Donald Trump from anti-China advocacy group «Committee on Present Danger: China» whose membership features hedge fund manager Kyle Bass and former Trump strategist Steve Bannon.

«[A]s, regrettably, a sizeable portion of the IPO proceeds will almost surely end up in the investment portfolios of millions of retail American investors.»