Business Maverick: Jack Ma’s Ant Incurs a 63% Profit Plunge Amid Overhaul

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Ant Group Co. incurred a steeper profit decline in the three months ended in June, as the fintech giant molds itself to appease Chinese regulators.

The Hangzhou-based company contributed 2.4 billion yuan to Alibaba Group Holding Ltd.’s earnings, a filing showed Thursday. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 7.3 billion yuan of profit for Ant’s June quarter, down 63% from a year earlier. Ant’s earnings, which lag a quarter behind Alibaba’s, were partly hurt by a drop in the value of its investments.

Its consumer finance unit is raising 10.5 billion yuan in a scaled-down capital boost from investors after China Cinda Asset Management Co. unexpectedly backed out of its investment plan this year. A subsidiary of Sunny Optical Technology Group Co. will take 1.1 billion yuan of Chongqing Ant Consumer Finance Co.’s capital, for a 6% stake. Jiangsu Yuyue Medical Equipment & Supply Co. plans to add 524 million yuan, taking a 4.99% stake. Ant Group will contribute 5.25 billion yuan to retain its 50% holding, while a group of other backers are also investing. The investment proposal is still pending regulatory approval.

Initially catering to Chinese tourists traveling outside the country, the company has expanded the service into a backbone for cross-border payments known as that can be used by different wallets. For example, when customers of GCash from the Philippines travel to Korea, they can pay with GCash when they see the Alipay+ logo displayed at merchants., which allows businesses to build digital stores across platforms including Chope, AlipayHK and Touch ‘n Go. The company plans to generate income from servicing brands like Burger King that want an online presence in various apps.

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