Chinese billionaire Jack Ma-backed Ant Group has submitted plans to restructure itself as a financial holding company, which would be overseen by China's central bank. The financial services company and Chinese regulators have agreed on a restructuring plan and it is expected to be announced officially before the start of China's Lunar New Year holiday next week, as per a Bloomberg report.
The move is being seen as effort by China's government to get oversight of Jack Ma's business empire. Alibaba co-founder Jack Ma' flagship company Ant Group Co had faced increased scrutiny from Beijing in recent months, which resulted in suspension of its initial public offering (IPO).
Ant was previously planning to make one of its subsidiaries a financial holding company. However, the new structure would require converting Ant's whole financial operations into a holding company that would face strict regulations, similar to those of the country's banks. Under the restructuring plan, Ant Financial Services Group is subjected to additional capital requirements similar to those for banks and other guidelines that span multiple financial business lines, as per the report.
In November last year, Chinese regulators had suspended Ant Group's IPO, raising questions about the business, which it had positioned as a fintech firm rather than a financial services provider. The Chinese fintech's public listing was touted to be world's biggest IPO at $35 billion. It was a major setback for Jack Ma's fintech firm, which will now face tighter scrutiny and will be subjected to restrictions on capital and leverage as banks. Besides, Ma was summoned by Chinese authorities, who informed that there has been significant change in the regulatory environment and that Ant's online lending business would face tighter scrutiny.
Coincidently, it happened just a month after Ma criticised China's regulatory system, saying it has a "pawnshop mentality" and that the company like AliPay was unsuitable for financial regulatory structure like that of China's. Calling for reform in the country's regulatory system, Ma blamed it for stifling business innovation and likened China's global banking regulations to an "old people's club."
Ma, who is known for occupying the limelight, had not made public appearance for months since October 24 after he criticised China's financial regulatory system in a speech. He later made his first public comments in January this year. According to the Jack Ma Foundation, the billionaire participated in the online ceremony of the annual Rural Teacher Initiative event on January 20. The Foundation also released a 50-second video where Ma was seen congratulating teachers.
By Chitranjan Kumar