Amid Chinese Pressure, Jack Ma's Ant Group Plans A Major Revamp Before Going Public Again

Regulators recently told Ant to become a financial holding company in its entirety, subjecting it to more stringent capital requirements.

(File Photo/ Getty)

New Delhi: Chinese billionaire Jack Ma led Ant Group Co. is likely to turn itself into a financial holding company to be overseen by China's central bank, responding to pressure to fall fully in line with the financial regulations.

Regulators recently told Ant to become a financial holding company in its entirety, subjecting it to more stringent capital requirements. In reply, Ant has reportedly sent an outline of a restructuring plan to the authorities. 

The plan represents a significant transformation in the digital payments juggernaut that has in recent years tried to shed its reputation as a financial services provider and fashion itself as an internet technology firm, which helped it command lofty valuations. 

Ant had been on track to go public at a valuation of over $300 billion, far above the world's largest banks' market capitalizations, until its blockbuster initial public offering (IPO) was called off last November.

Ahead of the IPO, in a bid to rebrand itself to emphasize technology rather than finance, the company changed its name from Ant Financial Services Group to Ant Technology Group Co. (Ant Group Co.)

Designating Ant as a financial holding company in its entirety was not something the company's executives and stakeholders had previously envisioned. Last year, in its listing prospectus, Ant said it intended one of its subsidiaries to become a financial holding company to house its licensed financial undertakings, such as asset management and consumer lending. In doing so, Ant would be subject to a thicket of regulations similar to those regulating banks at the group level, impacting its growth and profitability.

The development comes when the governor of China's central bank has signaled that the door for Ant Group's stock market debut remains open.

According to the People's Bank of China Governor Yi Gang, relevant agencies are still investigating issues related to monopolies at billionaire Jack Ma's Ant Group, adding that the matters were "complicated" and some risks concerned consumer privacy. Regulators need a specific legal structure to address the problems, Yi said on Tuesday during a panel at the World Economic Forum. "I would say that this is a process and also once the problem solved, it will go back to the track to continue consideration according to law," said Yi.  

When asked if that means an IPO, he added that if the business follows the legal framework, "you will have the result.