Ant Group, Alibaba subsidiary, reaches agreement with Beijing to restructure its activities

 

 

 

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.

 

 

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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