The Chinese government is now accelerating efforts to get Jack Ma’s Ant Company closer to its influence as part of a rectifying campaign that will render it impossible for one of the wealthiest men in the world to completely restore its online empire.
Three sources with knowledge of the matter say Chinese regulators are reviewing Ant Group Co Ltd’s equity investments in dozens of companies, intensifying a crackdown on billionaire Jack Ma’s financial technology empire. One of the three sources said regulators are considering ordering Ant to divest any of its assets if they break any laws, such as causing excessive competition in the industry.
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Two of the three sources said that regulators are looking into Ant investments over the last few years, the rationale behind such deals, and their synergies. They declined to be identified since they are not authorized to speak to the media.
According to one of the sources, regulators would like Ant, whose businesses include payment processing, consumer lending, and insurance products distribution, to divest some of its investments unless they are indispensable to the sales of the company’s products.
According to Refinitiv data, the fintech giant founded and controlled by Ma has made 81 equity investments worth $21.6 billion, including a stake in a Chinese state bank and a stake in an Indian digital payment processor.
Ant Group is the parent company of China’s biggest electronic payment network, Alipay, and the world’s leading transparent platform for financial technology. Alibaba owns 33% of the company.
According to people briefed regarding negotiations between the central bank and the firm, the consumer lending unit of Ant and other fast-growing sections of the financial technology sector would be split into a separate financial holding company to be controlled by the People’s Bank of China. Ant would come under the control of the regulators Mr. Ma has long fought against, with public critiques that irritated government authorities and officials at China’s state-owned banks.
Ant was rebuked by the People’s Bank of China in a public statement this past weekend, which called for its overhaul and claimed that it was ” ignoring compliance requirements “. Jack Ma’s ambitions to reshape the country’s state-led financial system have irritated many officials for years.
The group would be deprived of potentially profitable investments if it were forced to divest, multiplying the pressure that is already on it to revamp its business structure and provide more capital for its key consumer lending operations.
Divestments will also have a dramatic negative effect on the country’s fast-growing fintech sector, which has recently been strengthening its businesses through acquisitions.
The Chinese government has tightened its grip on anti competitive behavior in its thriving internet market. An investigation was conducted last week by Authorities on Ant’s sister company Alibaba, and ANT was directing to shake up its banking and other consumer finance operations.