Jack Ma’s Ant Group is considering moving all of its financial services units to a separate holding company that would be regulated like a bank, Reuters reported on Tuesday (Dec. 29), citing sources.
The People’s Bank of China (PBOC) told Reuters that Ant is in the process of outlining a strategy for the new company that would put all of its financial services businesses — including consumer lending, wealth management and insurance — under one umbrella.
Alipay, Ant’s payments division, would also likely be moved to the new holding company. Consumer lending is Ant’s biggest revenue driver, followed by Alipay.
The reorganization of Ant’s business is still in progress and could be revised, the source told Reuters. If it is approved, the company’s estimated valuation of $315 billion would likely be slashed.
Wang Zhen, a Shanghai-based analyst with UOB-Kay Hian Holdings Ltd., told Bloomberg on Monday (Dec. 28) that China is looking to “encourage domestic consumption,” and platforms such as Ant can assist with consumer loans.
“The key is that consumer lending shouldn’t be over-leveraged,” he said.
Chinese lawmakers turned their attention to the FinTech giant — a spin-off from Alibaba — when Ma criticized the country’s FinTech regulations in a speech at the Bund Summit in Shanghai. In turn, Chinese President Xi Jinping pulled the firm’s initial public offering (IPO) and called Ma in for questioning, along with Ant Chairman Eric Jing and CEO Simon Hu.
The highly-anticipated $37 billion IPO in Shanghai and Hong Kong was on track to break records for the world’s biggest public filing. It was suspended on Nov. 3.
China’s central bank told Ant on Sunday (Dec. 27) that it should revamp its business to focus on payments. The regulators also criticized the company for how it treated its rivals and its customers. The previous day, PBOC met with representatives of Ant and regulatory officials from the country’s securities, banking and foreign exchange sectors.