Chinese regulators along with Jack Ma and his Ant Group have reached an agreement that would turn the financial technology company (FinTech) into a financial holding company. That means Ant will operate under rules similar to banks, including stricter capital requirements.
Bloomberg reported Wednesday (Feb. 3) that people familiar with the matter said this would put Ant’s wide-ranging offerings — including in areas like food delivery and blockchain — under the holding company. Ant had earlier proposed that it put only financial operations into a holding company.
An official announcement on the restructuring could come before the start of China’s Lunar New Year holiday next week, Bloomberg said, citing sources who did not want to be identified.
Alibaba Group, which billionaire Jack Ma founded in 1999, owns about one-third of Ant, a spinoff company.
After Bloomberg’s report came out, Alibaba’s stock erased losses in Hong Kong trading on Wednesday.
Ant is China’s behemoth payments provider through its digital payments service Alipay. But it is also a major Chinese lender, and that is what attracted regulators’ scrutiny.
Problems with regulators hit full force in November when the Shanghai Stock Exchange acted to delay Ant Group’s plan to go public with a $34 billion initial public offering (IPO). At the time, Ant was worth an estimated $316 billion.
Those go-go days are probably over.
Bloomberg reported that Ant is still looking to revive its IPO, one person familiar with the matter said.
A lot is still to be decided regarding Ant’s future. Regulators need to detail what capital requirements Ant must meet and deal with the fact that the company has multiple lines of financial business.
Ant declined to comment for the Bloomberg report. Also declining to comment was the People’s Bank of China, which oversees financial holding companies.
Ant’s restructuring is part of a broader government campaign to increase supervision of the financial and technology sectors. Last month, regulators put forward an antitrust plan to curb market concentration in online payments, which is dominated by Ant and Tencent Holdings.
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