Ant mulls holding co for financial operations
HANGZHOU: Jack Ma’s besieged Ant Group Co. is planning to fold its financial operations into a holding company that could be regulated more like a bank, according to people familiar with the situation, potentially crippling the growth of its mostprofitable units.
The fintech giant is planning to move any unit that would require a financial license into the holding company, pending regulatory approval, said the people, who asked not be named because the matter is private. The plans are still under discussion and subject to change, the people said. Ant declined to comment.
The operations that Ant is looking to fold into the holding company include wealth management services, consumer lending, insurance, payments and MYbank, an online lender in which Ant is the largest shareholder, the people said. Under the financial holding company structure, Ant’s businesses would likely be subject to more capital restrictions, potentially curbing its ability to lend more and expand at the pace of the last few years.
That said, the proposals suggests Ant would still be able operate in financial services beyond its payments business, quelling investor concern about how to interpret the central bank’s Sunday message when it asked Ant to return to its roots as a payments provider.
“This means China is still trying to encourage domestic consumption, and they need platforms like Ant to help with consumer loans,” said Wang Zhen, a Shanghai-based analyst with UOB-Kay Hian Holdings Ltd. “The key is that consumer lending shouldn’t be over-leveraged.”
SoftBank Group Corp. rose 4.5%, the most in more than two weeks. Alibaba Group Holding Ltd rose 5.7% in Hong Kong, the most since November 5. The Japanese company is the largest shareholder in Alibaba, a major backer of Ant. Chinese regulators also told Ant to devise a plan to overhaul its business, the latest in a series of steps to rein in Ma’s online finance empire.
The country’s central bank also stressed that Ant must “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.