Ant mulls restructuring to placate regulators

Bloomberg, Reuters and Avery Chen

Jack Ma Yun's under-siege Ant Group will go along with a push by the central bank for it to fold its financial operations into a holding company that could be regulated more like a bank, likely halting growth of its most profitable units.

The giant would move any unit requiring a financial license into the holding company. But plans remain under discussion, and Ant refused 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 largest shareholder.

Under the holding company structure, Ant's businesses would be subject to more capital restrictions, curbing its ability to lend more and expand at the pace of the last few years.

So Ant's growth "would slow a lot," said Francis Chan, a Bloomberg Intelligence analyst in Hong Kong.

The valuation of the non-payment businesses, including wealth management and consumer lending, he added, could be slashed by up to 75 percent.

The People's Bank of China said Ant should ensure all financial operations are under regulatory supervision.

Ant controls a range of financial institutions and should set up a holding firm according to law, it said.

This comes after Chinese regulators told Ant to devise a plan to overhaul its business.

And China's banking and insurance regulator yesterday urged consumers to guard against excessive borrowing spurred by internet platforms.

Also yesterday, the Beijing Intellectual Property Court registered a case against food delivery giant Meituan (3690) after it removed Ant's Alipay as one of its payment methods from its online shopping platforms.

Alibaba (9988), which owns a third of Ant, has also formed a joint venture with SAIC Motor and Shanghai Zhangjiang Hi-Tech Development in a push into new energy vehicles.

Alibaba has a stake of about 18 percent.

And Hong Kong stocks rebounded yesterday after a massive selloff of technology equities since late last week.

The Hang Seng Tech Index rose 2.59 percent to 7,997 points. Alibaba rallied 5.71 percent to HK$222.