The Fintech giant Alibaba, put under pressure by the Chinese government
in recent weeks, has reached an agreement with the latter regarding its
reorganization.
Shaken for several weeks by the pace of
investigations and rumors, Ant Group was conducting negotiations with
Beijing for its restructuring. And it seems decided, since the group has
announced that it has reached an agreement with Chinese regulators. Ant
Group will therefore consolidate all of its activities into a financial
holding company.
read also: Jack Ma, the founder of Alibaba who has been missing since the end of October, has reappeared!
The pressure was too strong around Ant
By the end of December,
regulators from the Middle Empire met to take stock of and sound the
alarm bells on Jack Ma's fintech, Ant Group. China criticized the
company for having moved away from what was its core business, online
payment, by spreading itself too thinly in other markets.
To put
pressure on the group, Beijing halted Ant's IPO process in Hong Kong and
Shanghai last November, with an IPO that was estimated at around $ 32
billion.
Then rumors of nationalization, reinforced by the
disappearance of the circulation of Jack Ma, were launched by the
international press. This nationalization would be motivated by the
desire to promote the economic development of China and that of fighting
against a 'disorderly expansion of capital'. Alibaba and Ant were then
put in the same basket.
Ant Group could, in the coming months, relaunch the IPO procedure
As
the always very well-informed Financial Times indicates, the agreement
between Ant Group and the regulators provides for the main activities of
FinTech to be grouped together in a financial holding holding company,
with stricter capital requirements which will result in the he company
will be seen more as a bank, and less as a technology company.
Thus, Ant Group would comply with the latest regulations put in place in November 2020 by the People's Bank of China.
It
will still take some time, probably several months, for the
restructuring to take place. This will materialize in particular by the
splitting of its consumer credit activities, with data collected on more
than a billion customers. Once completed and definitively validated by
the authorities, the procedure will allow Ant Group to resume its IPO
process. But before that, it will be necessary for the online payment
giant to cash a possible and considerable reduction in its revenues and
its valuation.
Source : Financial Times
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