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Ant Group and China Regulators Agree to Restructuring Plan

2021-02-03 11:50:39

Ant Group Co. and Chinese regulators have agreed on a restructuring plan that will turn Jack Ma's fintech giant into a financial holding company, subjecting it to capital requirements similar to those for banks.

The plan calls for all of Ant's businesses to be brought into the holding company, including technology offerings in areas such as blockchain and food delivery, people familiar with the matter said. One of Ant & # 39; s first proposals to regulators was to stop only financial operations in the new structure.

An official announcement about the overhaul could come before the start of the Chinese New Year holiday next week, people said, asking not to be identified as they discussed private information. Alibaba Group Holding Ltd., which owns about one-third of Ant, cleared losses in Hong Kong on Wednesday after Bloomberg reported the deal. The stock closed with a gain of 0.4%.

Ant's restructuring plan marks the first major step in what is expected to be a lengthy overhaul process as regulators set detailed capital requirements and other guidelines for companies spanning multiple financial divisions.

China only introduced its financial holding framework in September and many of the details are still being ironed out. While the rules will eventually provide Ant with more regulatory clarity, they will almost certainly force the company to slow down the scorching pace of its expansion, making it China's dominant fintech player and one of the world's most valuable startups. has become.

Ant is still exploring options to revive his IPO, which was abruptly halted by regulators in November, a person familiar with the matter said. But given that the financial holding company framework is so new, it's unclear how long it may take for authorities to sign a listing.

Ant declined to comment. The People & # 39; s Bank of China, which oversees financial holding companies, did not immediately respond to a faxed request for comment.

The restructuring of Ant is part of a wider government campaign to strengthen oversight of the financial and technology sectors. In recent months, regulators have focused on everything from crowdfunding in healthcare to lending to consumers. In January, they proposed measures to curb the market concentration in online payments, with Ant and Tencent Holdings Ltd. are the biggest players.

Jack Ma, founder of Ant Group

The repression has sparked intense speculation about the status of Ma, who co-founded both Ant and Alibaba. The e-commerce giant has also faced increased government scrutiny in recent months and became the target of an antitrust investigation in December.

Ma & # 39; s performance in a live-streamed video conference in January – after not being public for several months – helped to avoid worst-case scenarios for his business empire. Still, much uncertainty remains: even after Wednesday's gains, Alibaba shares in Hong Kong are about 15% below their all-time high in October.

–With the help of Heng Xie and April Ma.


Copyright 2021 Bloomberg.

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