By
Chimamanda U. Martha
September 18th, 2023
As part of the agreement, the Ant Group will club all of its financial wings including blockchain and fintech arms in one holding company. Analysts note that this will, however, slow down the growth of the company.
Jack Ma‘s FinTech giant Ant Group has reached an agreement with Chinese regulators over a restructuring and overhaul plan. The agreement involves combining all of Ant Group’s business segments into a financial holding company.
The Bloomberg report mentions that this will subject the Ant Group to capital requirements similar to other banks in China. The new holding company will include all of Ant Group’s technology offerings in areas such as food delivery and blockchain. The people familiar with the matter also noted that Ant’s previous proposal involved only having financial operations within the new structure.
Over the last few months, Ant Group chief Jack Ma has been in a cold war with the Chinese officials. The hostility started after Ma criticized the Chinese banking sector for holding up back with innovation. Ma, a media-savvy person, has remained off from public appearance with his latest appearance just a week back.
It’s just last September 2020 that China introduced the framework for financial holding companies. Reportedly, the lawmakers are still working on the specifics of the matter. The rules will certainly provide more regulatory clarity for Ant, however, it will certainly slow down the company’s speed of expansion. Ant Group has emerged as a dominant player in China’s fintech sector.
Ant Announcement after Agreement with Regulators by China’s New Year
People familiar with the matter said that the official announcement of the overhaul will happen around China’s Lunar New Year next week. The restructuring marks the first-of-its-kind overhaul process. Besides, the overhaul process is likely to be going for a long time as regulators present detailed capital requirements along with other companies in the space that are spread with multiple financial business lines.
However, investors are waiting on the sidelines for Ant Group’s Initial Public Offering (IPO). In what was believed to be the biggest IPO in the history of the global market, the Chinese regulators abruptly halted the developments in November 2020. However, a person familiar with the matter said that Ant Group is still exploring possibilities to revive its IPO. It remains to be seen how Ant Group can pull this off through its new financial holding company.
Bloomberg reports that the restructuring of Ant Group is part of a broader plan of the Chinese government to increase its scrutiny in the financial and tech space. Recently, regulators have been also targeting consumer lending and crowd-funding in healthcare. Besides, the government also proposed to break monopolies in only payments. The Ant Group and Tencent are the biggest players in this segment. It will be interesting to see how things proceed from here onwards.