Jack Ma's Ant Group reaches agreement with China regulators to turn into financial holding company

Source: AFP

Ant Group, the financial-services company founded by Chinese billionaire Jack Ma will restructure itself as a financial holding company.

The fintech giant and Chinese regulators have agreed on a restructuring plan for it, making it subject to capital requirements similar to those for banks, reported Bloomberg citing people familiar with the matter.

According to the report, the restructuring plan talks about putting all of Ant’s businesses into the holding company, which includes its technology offerings in areas like blockchain and food delivery. Ant had previously announced plans for only financial operations to become a financial holding company.

The move could be officially announced before the start of China’s Lunar New Year holiday next week, said the report.

The restructuring plan of Ant said to be “the first big step in what’s expected to be a lengthy overhaul process, as it includes drawing up detailed capital requirements and other guidelines for companies that span multiple financial business lines, suggested the report.

In September 2020, China issued new rules to regulate financial holding companies, in a move to prevent systematic risks to the nation’s vast financial sector. The new rules were rolled out as a small number of companies expanded blindly into the financial sector without isolation mechanisms and while accumulating risks, the People’s Bank of China (PBOC) had said in a statement.

Meanwhile, Ant is still exploring possibilities to revive its initial public offering (IPO), which was suspended by regulators in November 2020, said the report quoting people familiar with the issue.

The catalyst for Ma's current woes was an October 24 speech in which he blasted China's regulatory system, leading to the suspension of his Ant Group's $37 billion IPO just days before the fintech giant's listing.

Regulators have since launched an anti-trust probe into the tech sector with Alibaba taking much of the heat, while tighter regulations for Ant Group are also being considered.

Ma, who is not known for shying away from the limelight, subsequently disappeared from the public eye for about three months, triggering frenzied speculation about his whereabouts. He re-emerged in January with a 50-second video appearance.

(With inputs from agencies)