Extending from asset management to consumer financing and insurance – and returning to its origins as a payment service – China ordered Ant to re-examine its fintech businesses.
While the central bank’s statement on Sunday was short on clarity, it poses a serious threat to the growth of billionaires and the most lucrative operations. Jack MaOnline finance empire. Regulators stopped asking directly for the company’s collapse, though insisting that Ant “understands the need to keep his business afloat” and asked to come up with a plan and schedule as soon as possible.
Authorities succumbed to ants for sub-par corporate governance, disregard for regulatory requirements, and involvement in regulatory arbitration. The central bank said Ante used its dominance to exclude competitors, harming the interests of millions of its customers.
Ant replied that he would form a special team to comply with the demands of regulators. It will maintain business performance for users, not raise prices for customers and financial partners, and advance risk control.
The Hangzhou-based company needs to set up a separate financial holding company to comply with the rules and ensure it has sufficient capital, regulators added.
Here are some insights from investors and analysts on what the restructuring will look like:
Mild
Optimists say regulators are re-emphasizing their right to oversee the country’s financial sector, and are sending warnings to Internet companies without the intention of drastic change.
Beijing may try to set an example from the Mani ant, the largest of the rafts of new but comprehensive fintech platforms. The last setbacks of this nature have been short-lived blows to companies, in which they remain largely scattered. Social media giant Tencent Holdings Ltd.The main goal of the campaign to fight gaming addiction in children, for example, became in 2018. When her stock found success, it finally reached an all-time high.
Ants attached, Alibaba Group Holding Ltd similarly regains investor confidence after a short-term sell-off, which has led to allegations by officials of everything from fake e-commerce platforms and unfairly squeezed merchants.
“I don’t think regulators are thinking of breaking the ant, as there is no monopoly of a fintech company in China.” Zhang Kae, an analyst at market research firm Analysis Ltd, said the act not only targeted Ant, but also sent him. Warn other Chinese fintech companies. ”
Some see it as an opportunity for ants. With strict oversight of the industry as a whole, Ant has more resources to meet the challenges as an industry leader, Zhang said.
Bad
A more troublesome result would come if regulators proceeded to break up the ant group. Which will complicate shareholder formation, and hurt the company’s fast-growing industries.
Its initial public offering was valued at about 5 315 billion before the fur was discontinued, with Ante reducing investment from the world’s largest fund. Among them: Warburg Pincus LLC, Carlyle Group Inc., Silver Lake Management LLC, Temasek Holdings PT and GIC PT.
The company was backed by global investors in 2018 when it was valued at about ૧ 1 trillion in its last round of funding. A break-up following the timeline for an IPO in November will make their return on investment uncertain. Distant future.
The government will ask the ants to cut back on its more profitable functions of asset management, financing and insurance, so that they can be further investigated.
“The emerging reality is that Chinese regulators are adopting similar regulation towards banks and fintech players,” said Michael Norris, research and strategy manager at the Shanghai-based consultancy agency.
The business of paying ants lowers fantasies alone. While the service has handled tr 17 trillion transactions in a year, payments online payments have been largely loss-making. The two largest mobile payment operators, called Anti and Tencent, heavily subsidize businesses, using them as a gateway for users to win. To make money, they took advantage of paid services to sell products, including asset management and credit financing.
“Ant’s growth prospects will be focused on its payment services,” said Chen Shujin, head of China financial research at Jeffrey Financial Group Inc.
Nightmare
Leaving Ant’s money management, credit and insurance businesses, would be the worst case scenario of its operations stalling in units serving half a billion people.
Its asset management business includes the Yubao platform which sells mutual funds and money market funds, accounting for 15% of the revenue.
Credit Tech, which includes the Antony Hubei and GBE units, was the largest revenue driver for the group, contributing a total of% of% in the first six months of this year. It lent to about 500 million people.
That result will be drawn by the idea that China’s leaders are frustrated by the mess of tech billionaires and want to teach a lesson by killing their businesses – even if it means short-term pain for the economy and markets.
China’s private sector has maintained a delicate relationship with the Communist Party for decades, and has only recently been recognized as the center of the country’s future. Many critics have blamed Mae’s remarks at a conference in October for the recent crackdown on fintech companies, which he described as “short-sighted and constructive”.
Among them, Alibaba, Ant and Tencent ordered a combined market capitalization of about tr trillion dollars in November, leaving behind state-owned Behemoths such as Bank China F China Limited as the most valuable companies in the country.
The trio have invested billions of dollars in hundreds of up-and-coming mobile and internet companies, earning users the status of kingmakers in the world’s largest smartphone and internet market.
“The Communist Party is the end of China and the best. He controls everything. ” Alex Capri, Singapore-based research partner of the Heinrich Foundation. “There is nothing that the Chinese Communist Party cannot control and anything that is going out of its orbit will withdraw very quickly,” he said, adding that “we can expect to see more.”
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