Alibaba Group Holding Ltd.’s finance affiliate is considering an initial public offering in Hong Kong in the first half of next year after running into regulatory hurdles for a dual listing that would have included Shanghai, according to people familiar with the matter.

Mainland China’s restrictions on stock options are discouraging Zhejiang Ant Small & Micro Financial Services Group Co. from its original plans for the dual listing, said the people, asking not to be named because the matter is private. A Shanghai IPO hasn’t been completely ruled out yet and the company could consider a mainland offering later, the people said.

Ant Financial controls China’s biggest online payment service, Alipay, and was valued at $60 billion in the latest fundraising. Its IPO would likely be among the biggest ever for Hong Kong, though the specific amount to be raised hasn’t been decided, the people said. It would also be the latest blow to China’s exchanges, which have been roiled by volatility and tight regulations.

Companies listing in Hong Kong normally need a free float of at least 25 percent while those that meet certain size criteria can seek approval to sell as little as 15 percent. A 15 percent stake in Ant Financial would be worth about $9 billion based on the most recent valuation.

China’s current rules impose restrictions on IPOs by companies that have more than 200 existing shareholders, and also require all stock options to be vested in advance. Since Ant Financial uses options as an incentive for workers, it would need a special waiver from the country’s security watchdog, the people said.

A listing in Shanghai would also put the company into a long line of firms waiting for approval from the China Securities Regulatory Commission, which has become wary of changing regulations after a tumultuous year for its domestic stock market.

Ant Financial doesn’t have a timeline or place of preference for an IPO, company spokeswoman Miranda Shek said by phone.

Ant Financial, controlled by Alibaba Chairman Jack Ma, completed a $4.5 billion equity fundraising round that valued the owner of Alipay at about $60 billion, people familiar with the matter said in June.

Besides Alipay, Ant Financial also controls the company that manages Yu’E Bao, the nation’s largest money-market fund.

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