Alibaba, Ant Group sells to Beijing and becomes a holding company
What will change for Ant Group, a fintech company of Jack Ma, founder of Alibaba, after the agreement with Chinese regulators
Chinese tech giant Alibaba yields to pressure from Beijing.
Ant Group, the fintech giant owned by Alibaba (33%), will become a wholly financial group, accepting the conditions set by the Beijing authorities. This was reported by the Bloomberg agency, which anonymously quotes people aware of the matter.
The restructuring plan requires that all Ant's activities, including those in the areas of blockchain technology and food delivery, and not just financial ones, re-enter the company.
The plan would therefore make Ant subject to the same requirements that banks in China are subject to. The changes will leave China's largest mobile payment company subject to stricter capital requirements.
An official announcement is expected in the coming days, before the start of the Lunar New Year holidays, which occurs on 12 February next.
Meanwhile, yesterday's Hong Kong-listed shares of Alibaba went from a 4% loss to a slight gain on news of Ant's deal.
THE PLAN FOR ANT GROUP
China's Ant, from the tech group founded by Jack Ma, and Chinese regulators have agreed on a restructuring plan that will turn the fintech company into a financial holding, making it subject to capital requirements similar to those of banks.
The proposed restructuring will result in Ant placing all of its core businesses, including its technology units, within a financial holding company to comply with the new regime implemented by the People's Bank of China in November.
CAPITAL RAISING IN VIEW ACCORDING TO THE FT
Ant Group is likely to need to raise capital to meet PBoC rules for financial holding companies, according to the Financial Times . The latter, together with the requirements on capital adequacy, risk control and governance, make participation vehicles more similar to banks than to technology companies.
Not to mention that the authorities have yet to release a final version of the draft online loan regulations. The new regulation would require internet lending platforms like Ant to fund at least 30% of every loan they make from their balance sheet.
TRY US WITH THE IPO?
According to media reports, Ant is still exploring the possibility of relaunching its stock, which was blocked by regulators last November. The fintech company controlled by e-commerce giant Alibaba was aiming to raise $ 37 billion. The IPO would have been the largest ever.
But lawyers had warned that the new rules would force a review of Ant's business model. Therefore, the draft regulations for the online loan had to be concluded before Ant could reschedule the listing.
HOW ALIBABA PASSES IT
Even though Alibaba had to shelve the IPO, the Covid effect on online purchases makes the accounts shine. The Chinese e-commerce giant, despiteChinese antitrust pressure and troubles with the Beijing authorities of founder Jack Ma, announced on Tuesday a 37% increase in turnover to 222 billion yuan (34.24 billion dollars). ) in the third fiscal quarter ended in December. Core revenues increased 38% to a record high of 195.54 billion yuan, fueled by the company's Chinese operations, in the wake of the recovery in Beijing's economy. Net profit increased by 52% to 79.4 billion yuan (10.1 billion dollars). “China was the only major economy in the world to have a growing GDP last year. Thanks to the rapid recovery of the Chinese economy, Alibaba had another very rich quarter, ”said Daniel Zhang, president and chief executive of Alibaba Group.
ANT GROUP PROFITABLE
Alibaba's results showed that Ant also remained incredibly profitable in the third quarter of last year. Ant posted a net profit of 21.9 billion yuan in the first half of 2020. The company's Alipay app has more than 700 million monthly users who use it to swipe their finger to pay, borrow, insurance and manage. their money.
THE TROUBLES OF ALIBABA
But in addition to blocking the listing of Ant Group in November, Beijing regulators have also encircled the giant Alibaba, of which Ant is the financial arm.
In December, China's state market surveillance administration launched an antitrust investigation against Alibaba . Without forgetting thatthe State Administration of Market Regulation (Samr) had already fined Alibaba , China Literature backed by Tencent and Shenzhen Hive Box of 500,000 yuan (76,464 dollars) each, the maximum under a 2008 anti-monopoly law, for not having correctly reported merger operations to the authority.
JACK BUT NO MORE IN BEIJING THANKS
Finally, after a long absence from the public scene that had raised various speculations, the founder of the group, Jack Ma , also reappeared. Although his name has disappeared from a list of major Chinese entrepreneurs published by the Beijing media, further proof of how the iconic Alibaba co-founder has come into conflict with central authorities.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/fintech/alibaba-ant-group-cede-a-pechino-e-diventa-holding/ on Thu, 04 Feb 2021 11:23:30 +0000.