Jack Ma’s Ant reaches an agreement with Chinese regulators on the overhaul

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Ant Group Co. and Chinese regulators have agreed on a restructuring plan for the company.

Ant Group Co. and Chinese regulators have agreed on a restructuring plan that will turn the fintech giant from Jack Ma into a financial holding company, with capital requirements similar to banks.

The plan calls for all of Ant’s business to be incorporated into the holding company, including technology offerings in areas like blockchain and grocery delivery, according to people familiar with the matter. One of Ant’s early proposals to regulators was to include only financial operations in the new structure.

An official announcement of the overhaul could be made before the Chinese New Year holidays start next week, people said, asking not to be identified to discuss private information. Alibaba Group Holding Ltd., which owns around a third of Ant, eliminated losses in Hong Kong trading on Wednesday after Bloomberg reported the deal. The share closed with an increase of 0.4%.

Some market participants had speculated that Ant might be forced to outsource parts of its business, which now seems unlikely, said Shujin Chen, head of Chinese financial research in China at Jefferies Financial Group Inc.

Ant’s restructuring plan marks the first major step in what is expected to be a lengthy overhaul process as regulators develop detailed capital requirements and other guidelines for companies that span multiple financial operations.

China didn’t introduce its financial holding company framework until September, and many of the details are still being ironed out. While the rules will ultimately create more regulatory clarity for Ant, they will almost certainly force the company to slow down the rapid pace of expansion that has made it China’s dominant fintech player and one of the most valuable startups in the world.

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Ant is still exploring ways to revive its IPO, which was abruptly stopped by regulators in November, said a person familiar with the matter. Given that the framework for financial holding companies is so new, it’s unclear how long it could take for authorities to sign a listing.

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Ant declined to comment. The People’s Bank of China, which oversees financial holding companies, did not immediately respond to a faxed request for comment.

Ant’s restructuring is part of a wider government campaign to improve oversight of the finance and technology sectors. Regulators have been targeting everything from healthcare crowdfunding to consumer lending for the past few months. In January, they proposed measures to curb online payments market concentration, with Ant and Tencent Holdings Ltd. the biggest players are.

The move has led to fierce speculation about the status of Ma, who co-founded both Ant and Alibaba. The e-commerce giant has also been under increased government scrutiny in recent months and was the target of an antitrust investigation in December.

Ma’s appearance on a live streaming video conference in January – after several months out of the public eye – helped stifle discussion of worst-case scenarios for his business empire. Still, a lot of uncertainty remains: even after Wednesday’s profit, Alibaba’s Hong Kong shares are trading around 15% below their record high in October.

(Except for the headline, this story was not edited by GossipMantri staff and posted from a syndicated feed.)

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