Ant Group reaches agreement with China’s regulators on restructuring plan

Ant Group's Hangzhou Headquarters. Source: Ant Group

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, making it subject to capital requirements similar to those for banks.

The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas like blockchain and food delivery, people familiar with the matter said. One of Ant’s early proposals to regulators had envisioned putting only financial operations into the new structure.

An official announcement on the overhaul could come before the start of China’s Lunar New Year holiday next week, the people said, asking not to be identified discussing private information. Alibaba Group Holding Ltd., which owns about a third of Ant, erased losses in Hong Kong trading on Wednesday after Bloomberg reported the agreement. The stock closed with a 0.4% gain.

Ant’s restructuring plan marks the first big step in what’s expected to be a lengthy overhaul process, as regulators draw up detailed capital requirements and other guidelines for companies that span multiple financial business lines.

China only introduced its framework for financial holding companies in September and many of the specifics are still being ironed out. While the rules will eventually provide more regulatory clarity for Ant, they’ll almost certainly force the company to slow the torrid pace of expansion that has made it China’s dominant fintech player and one of the world’s most valuable startups.

Ant is still exploring possibilities to revive its initial public offering, which was abruptly halted by regulators in November, one person familiar with the matter said. But given the financial holding company framework is so new, it’s unclear how long it might take for authorities to sign off a listing.

Ant declined to comment. The People’s Bank of China, which oversees financial holding companies, didn’t immediately respond to a faxed request for comment.

Ant’s restructuring is part of a broader government campaign to increase supervision of the financial and technology sectors. Regulators have in recent months targeted everything from health-care crowdfunding to consumer lending. In January, they proposed measures to curb market concentration in online payments, where Ant and Tencent Holdings Ltd. are the biggest players.

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

Ma’s appearance in a live-streamed video conference in January — after several months out of public view — has helped quell talk of worst-case scenarios for his business empire. Still, plenty of uncertainty remains: even after Wednesday’s gain, Alibaba’s Hong Kong shares are trading about 15% below their record high in October.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.