Jack Ma’s besieged Ant Group is planning to fold its financial operations into a holding company that could be regulated more like a bank, according to people familiar with the situation, potentially crippling the growth of its most-profitable units.
That said, the proposals suggests Ant would still be able operate in financial services beyond its payments business, quelling investor concern about how to interpret the central bank’s Sunday message when it asked Ant to return to its roots as a payments provider.“This means China is still trying to encourage domestic consumption, and they need platforms such as Ant to help with consumer loans,” said Wang Zhen, a Shanghai-based analyst with UOB-Kay Hian Holdings.
“Its 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, could be slashed by as much as 75%, he said. Under rules that took effect in November, non-financial companies which control at least two cross-sector financial institutions are required to hold a financial holding licence. Rules on how financial holding companies could be regulated are still under deliberation.Chan estimates that Ant needs to inject at least $11bn of new capital just for its credit-lending business.