Ant Group reportedly reaches deal with China regulators on restructuring

Yolanda Curtis
February 4, 2021

The plan calls for putting all of Ant's businesses into the holding company, including its payment processing and technology offerings in areas like blockchain and food delivery, the person said, declining to be named due to confidentiality constraints.

An announcement about the restructuring, which will result in the company being subject to capital requirements similar to those for banks, could come before the start of China's Lunar New Year holiday on February 11, the Bloomberg report said.

"Therefore, Ant Group's business prospects and IPO plans are subject to substantial uncertainties", the company said.

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. "There's no systemic financial risks in China because there's no financial system in China".

The squeeze on one of China's most influential companies is the latest sign that the leadership is ready to deflate the ambitions of big tech firms in a runaway internet sector. According to Bloomberg, Ant is still exploring opportunities for its potential IPO, but the new holding framework could make it more hard as it is unclear how long it will take for authorities to come up with a listing decision.

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.

Bloomberg Intelligence analyst Francis Chan estimates Ant's valuation could drop to $108 billion.

Ant Group, the financial-services company founded by Chinese billionaire Jack Ma will restructure itself as a financial holding company. The e-commerce giant did not immediately respond to a request for comment. State media's mention of its founder and CEO Ma in the positive light could create calm for those anxious it might not avoid some of the risks being faced by Jack Ma's Alibaba and Ant Group. The e-commerce giant has also faced increased government scrutiny in recent months, becoming the target of an antitrust investigation in December.

Alibaba shares shed more than 4 percent on the Hong Kong Stock Exchange on Wednesday despite strong fourth-quarter earnings as uncertainty regarding regulatory environment lingers.

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