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China’s Ant Group to form a financial holding company after regulatory clampdown
- Regulators have instructed Ant Group to form a financial holding company under their supervision as well as shrink its money market fund Yu’ebao
- The revamp sets the clock ticking again on Ant Group’s countdown to IPO
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Ant Group, controlled by Chinese billionaire Jack Ma, said on Monday it will apply in its entirety to become a regulated financial holding company after China’s top regulators publicly mapped out a blueprint for overhauling the planet’s largest financial technology company.
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Ant, which operates the ubiquitous mobile payments platform Alipay, will place all of its financial-related activities in a holding company overseen by Beijing-based watchdog agencies, including its credit origination platform, its investment technology unit and its budding insurance operations. It will also create a licensed personal credit reporting company as part of its efforts to strengthen the protection of users’ data.
“Returning to its origin, our payment business will serve consumers and SMEs by focusing on micropayments and bringing them convenience,” the Hangzhou-based company said in a statement.
The People’s Bank of China (PBOC) and other financial regulators directed Ant on Monday to correct “improper competitive behaviour” surrounding Alipay, break an “information monopoly” over data collection and end “inappropriate” links between Alipay and its consumer-lending operations. They also called for Ant to shrink the assets under management of its money market fund, Yu’ebao.
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The regulators also required Ant to reduce the risk of financial contagion across key businesses, as well as to control high leverage.
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