(Bloomberg) — China warned Jack Ma and senior Ant Group Co. executives that the fintech giant will face new curbs on its expansion, highlighting growing regulatory risk for the world’s largest initial public offering just days before its trading debut.Ma, Ant’s billionaire co-founder and one of China’s most powerful businessmen, was summoned to a rare joint meeting on Monday with the country’s central bank and three other top financial regulators. While neither side disclosed details of what was discussed, people familiar with the matter said Ant’s leadership team was told the company will face increased scrutiny and be subject to restrictions on capital and leverage similar to banks.Investors have long understood that Ant would fall under new Chinese regulations on financial conglomerates, but the meeting may nonetheless temper the frenzy surrounding history’s biggest stock-market debut. Ant is due to start trading on Thursday after raising at least $34.5 billion in an IPO that attracted more than $3 trillion of orders from retail investors in Shanghai and Hong Kong.“Regulatory risks are the biggest risk factor for Ant Group,” Kevin Kwek, an analyst at Sanford C. Bernstein, said in a note. “We think the news will only be incrementally negative to the listing and believe most investors will remain optimistic on Ant’s positive long term prospects. Investors might nevertheless revisit their assumptions of growth given the clear signs of regulatory intervention.”Ant Chairman Eric Jing and Chief Executive Simon Hu joined Ma at the meeting, which included the banking watchdog, the China Securities Regulatory Commission and the State Administration of Foreign Exchange, according to a CSRC statement on Weibo. The release described it as a “yuetan,” or a regulatory warning.Ant said in a statement it will “implement the meeting opinions in depth” and follow guidelines including stable innovation, an embrace of supervision and service to the real economy.The central bank, banking regulator and CSRC didn’t respond to requests for additional comment.Ant has been hit with a wave of fresh rules in recent months as China tightens control over online lenders and companies that operate across multiple financial business lines. The measures have included capital and licensing requirements, a cap on loan rates and limits on Ant’s use of asset-backed securities to fund quick consumer loans. On Monday, the banking regulator released draft rules that would force Ant and other operators of online lending platforms to fund a greater share of the loans they offer together with banks.Good InnovationThe Hangzhou-based company, a 2010 offshoot of e-commerce giant Alibaba Group Holding Ltd., dominates China’s payments market via the Alipay app. It also runs the giant Yu’ebao money market fund and two of the country’s largest consumer lending platforms. Other businesses include a credit scoring unit and an insurance marketplace.Ant has faced censure in Chinese state media in recent days after Ma criticized local and global regulators for stifling innovation and not paying sufficient heed to development and opportunities for the young. At a Shanghai conference late last month, he compared the Basel Accords, which set out capital requirements for banks, to a club for the elderly.“Good innovation is not afraid of regulation, but is afraid of outdated regulation,” Ma said. “We shouldn’t use the way to manage a train station to regulate an airport, neither should we regulate the future with the method from yesterday.”A meeting over the weekend of the Financial Stability and Development Committee, presided over by Vice Premier Liu He, stressed the need for fintech firms to be regulated.Opinion pieces in official newspapers — including those run by the central bank and banking watchdog — have faulted Ant for straying from its core payments business and called out big tech for misleading users to consume beyond their means.Guo Wuping, head of consumer protection at the China Banking and Insurance Regulatory Commission, wrote in commentary on Monday that Ant’s Huabei consumer lending service was similar to a credit card but with higher charges. Fintech companies use their market power to set exorbitant fees in partnerships with banks, which provide most of the funds required, he said.Ant, which has more than 700 million monthly Alipay users, has made partnering with traditional banks a centerpiece of its strategy. Its lending platforms extended credit to about 500 million people in the 12 months through June, charging annualized rates on smaller loans of about 15%.New measures proposed by the banking regulator on Monday for online lenders included imposing a cap on the amount of loans to be offered to individual borrowers as well as the leverage.The draft rules could deal a major blow to Ant as they require platform operators to provide at least 30% of the funding for loans. About 2% of the 1.7 trillion yuan ($254 billion) of loans Ant facilitated as of June were currently on its balance sheet, the company said in its prospectus.Ant declined to comment on the proposed measures.The market impact of fresh regulatory scrutiny on Ant will become clearer when the stock debuts on Thursday, but for now investors appear to be taking the news in stride. Alibaba, which owns about a third of Ant, rose 2% in New York on Monday. Ant maintained early gains in the so-called gray market in Hong Kong, where shares were said to be trading at a 50% premium to the HK$80 listing price on Monday.Proceeds from the IPO could help Ant meet its rising capital requirements, said Francis Chan, a Hong Kong-based analyst with Bloomberg Intelligence. (Updates with details on meeting chaired by vice premier in 12th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.