Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

Ant Financial's plan to list in Hong Kong while putting a China IPO on the back burner carries one message for the mainland's cash-hungry tech stars: Stop fundraising if you want to go public at home.

Alluring valuations in China's stock market have drawn a wave of U.S.-listed Chinese companies, and an emerging few from Hong Kong, to delist with the aim of trading on the mainland. The fast-growing tech companies have attracted increasing numbers of investors through fundraising rounds -- and risk breaching a limit of 200 shareholders imposed by China, which is what could happen to Ant. While the company doesn't have more than 200 shareholders at present, that limit could be breached as existing stock options vest.

It's unclear just how many shareholders Ant has. But the financial-services affiliate of Alibaba Group has held a couple of fundraising rounds -- the latest, in April, valuing it at $60 billion -- to bring in investors like the sovereign wealth fund China Investment Corp. and China Construction Bank. Bloomberg News reports that restrictions on stock options and shareholders are blocking Ant's original plan for a dual Hong Kong-Shanghai listing. 

Such restrictions could spell trouble for big startups, because many of them raise cash through repeated funding rounds. In fintech alone, China (and Hong Kong) was the biggest beneficiary of such investing, accounting for 90 percent of all the money raised in Asia Pacific this year through July 31, according to data from Accenture released Thursday.

Lufax, the country's biggest P2P lender, raised $1.2 billion in its last round, and may go public next year. JD Finance, the consumer-finance unit of Alibaba's rival, raised $1 billion in January. Their exact shareholding numbers aren't easy to get, but tapping investors in several rounds will have increased the total. 

Overwhelmingly Chinese
The bulk of investment in Asia-Pacific fintech firms went to Chinese companies so far this year (to July 31)
Sources: Accenture Research, CB Insights

Even non-fintech giants like Didi, the $36 billion ride-hailing provider that counts Apple as an investor, may find its China routes challenged as it collects more and more investors through repeated fundraisings. 

While China does grant waivers of the shareholder cap, the securities regulator has been reluctant to do so recently, and has cracked down on the reverse mergers that helped the last wave of ex-U.S.-traded companies to go public in China. 

Burgeoning lists of holders mean many of China's hottest companies will have to go public in Hong Kong or the U.S., where valuations lag. 

Heady Valuations
The Shenzhen Stock Exchange and ChiNext trade at price-earnings multiples well above those in the U.S. and Hong Kong. Even SOE-dominated Shanghai trades above Hong Kong
Source: Bloomberg
Note: The Shenzhen Stock Exchange is made up of more "new economy" stocks than Shanghai; the ChiNext Board in Shenzhen is China's startup bourse.

Hong Kong investments like Tencent are a rarity: That company went public at about $2 billion in 2004, and now is worth almost $244 billion -- exceeding even the $234 billion of New York-traded rival Alibaba, whose chairman, Jack Ma, controls Ant.

But the frenzy for tech investing is cooling in the U.S., even as investors keep pouring record amounts into Chinese companies. And Ant's failure to get a China listing for now is a reminder that such giant returns aren't guaranteed.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

(Corrects second paragraph to show Ant hasn't yet breached the shareholder limit.)

To contact the author of this story:
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Paul Sillitoe at