Ant Group Co., the financial technology giant controlled by billionaire Jack Ma, will file an application to become a financial holding company overseen by China’s central bank, reviewing its business to adapt to a new era of stricter regulation for Internet companies.
In a statement, the People’s Bank of China said the ants’ representatives were summoned Monday to a meeting with four regulatory agencies that also included the country’s banking, securities and foreign exchange supervisors. He said that in recent months a “comprehensive and viable rectification plan” has been formulated for Ant under the supervision of regulators.
The board follows an intense regulatory assault on Mr Ma’s business empire that began with the suspension of the company’s initial box office offering in November. Ant had been on the verge of selling more than $ 34 billion in shares and listed on the Hong Kong and Shanghai stock exchanges, when Beijing won the contract after Ma criticized financial regulators in a public speech.
In January, the Wall Street Journal reported that Ant planned to fully comply with China’s financial regulations by becoming a financial company, a relatively new designation for companies that have substantial financial assets.
After Jack Ma criticized Chinese regulators, Beijing rejected the initial public offering of its fintech giant Ant and largely disappeared from public view. WSJ watches recent videos of the billionaire to show how he got into trouble.
Ant, owner of the ubiquitous payment and mobile lifestyle app Alipay, will have to correct what regulators called unfair competition in its payments business and improve its corporate governance. The Hangzhou-based company will have to reduce the liquidity risks of its investment products and reduce the assets managed by Yu’e Bao, its giant money market investment fund. Ant will also have to break an “information monopoly” on the vast and detailed consumer data it has collected, the central bank said.
The economic newspaper, a state-run newspaper, said in a comment Monday that Ant’s restructuring plan reflects recent calls by the central government that platform economies should return to their roots and focus on service. ‘economy and real people.
“The underlying color of financial technology remains funding,” the newspaper said. Formulating a rectification plan is only the first step, and going forward, Ant should be compared to the plan to fully meet the demands of regulators, the newspaper said.
Ant’s Alipay has more than one billion users in China. It managed the equivalent of more than $ 17 trillion in digital payment transactions from the year to June 2020, originated short-term unsecured loans to approximately 500 million people, and sells many insurance policies. investment and other investment products.
In a statement, Ant said it “will not spare any effort in implementing the rectification plan, ensuring that the operation and growth of our financing-related businesses are fully complied with.”
In addition to applying to become a financial holding company, the company said it would set up a licensed personal credit reporting company. It plans to turn Jiebei and Huabei, its two popular online personal loan services, into a regulated consumer finance company. Ant said his payments business will continue to be committed to serving consumers and small businesses.
“We will put our growth proactively within the national strategic context,” Ant said, adding that “it will strive to create social value”.
Ant group pet on company campus in Hangzhou, China, in January.
Photo:
Qilai Shen / Bloomberg News
The disclosure of Ant’s plan by regulators comes shortly after Ant’s sister company, Alibaba Group Holding Ltd.
BABA -2.16%
, was fined the equivalent of $ 2.8 billion by China’s antitrust regulator, which accused the e-commerce giant of abusing its dominant position in the market to the detriment of rivals, traders and consumers. In addition to the record penalty, Alibaba agreed to undertake a comprehensive overhaul of its operations and ensure compliance with fair competition rules.
Mr. Ma, who is Ant’s controlling shareholder, co-founded Alibaba and still has some shares in the company. Alibaba owns a third of Ant. Both companies, which have grown rapidly and are highly profitable, strive to appease regulators and move forward for their employees and shareholders.
Last fall, Ant was on its way to making itself public with a valuation of more than $ 300 billion, well above the market capitalizations of the world’s largest banks. Less than three years earlier, in June 2018, investors had valued Ant at $ 150 billion after a large private equity raising.
The most recent estimates of Ant’s valuation have varied widely. Many analysts and investors expect Ant’s profit potential to shrink, as it reduces some businesses, including online consumer lending, which was previously its main growth engine. By the end of January, some U.S. investment funds managed by Fidelity Investments had marked the value of its Ant shares at prices that involved a valuation of the company of about $ 230 billion, according to regulatory statements.
Write to Jing Yang to [email protected]
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