Earlier on Monday, the People’s Bank of China (China’s Central Bank) had imposed a sweeping overhaul on Alibaba-backed Ant Group under which the fintech conglomerate, whose record $37 billion dual listing in mainland Shanghai and Hang Seng were derailed over regulatory hurdles in November last year, must revamp as a financial holding company which would be regulated like an institutionalized financial enterprise such as a lender, highlighting Beijing’s determination to envelope a flurry of Jack Ma’s freewheeling businesses while keeping Chinese tech tycoons on their knees.
On top of that, according to the restructuring plan proposed by the China’s Central Bank, a revamp in Alibaba Group Holdings’ fintech arm Ant Group, which could take several months, would involve turning Ant into a financial holding entity, a move mostly enacted to trim the fintech conglomerate’s profitability alongside valuation by chopping off some of its unregulated and free-floating wings.
China asks Ant Group to turn itself into a financial holding
Nonetheless, latest intransigent moves from the People’s Bank of China (PBOC) came against the backdrop of a record $2.75 billion in punitive measures imposed on Jack Ma’s Ant Group-parent Alibaba Group Holding Ltd. as China seemed to be tightening its belts on a booming “platform economy”.
If truth is to be told, Chinese billionaire Jack Ma alongside his e-commerce giant Alibaba Group Holdings Ltd. had faced off a flurry of regulatory stumbling blocks since October last year, when the ‘salesman turned to a billionaire business magnate’, Jack Ma, had publicly criticized the world’s second largest economy’s fiscal policy.
Meanwhile, adding that a sweeping restructure of Ant Group would make the fintech conglomerate subject to stiffer regulatory oversight alongside capital requirement which in effect would hinder its ability to operate payment processing apps likes of Alipay, a Lightstream Research analyst Oshadhi Kumarasiri said followed by the PBOC announcement, “This restructure effectively splits Ant into a few independent businesses to stop Alipay from being a super app capable of controlling the day to day lives of the Chinese people. ”