Ma Yun’s Nightmare in Xi Jinping … Ant Group’s Forced Investment Disposition Review

Marwin’s Ant Group featured Ant and its logo. Photo group of ants

Ant Group, a subsidiary of China’s Alibaba Group, is in danger of being forced to ditch its foreign investment. This is because fierce regulation by financial authorities is intensifying for companies owned by founder Ma Yun, who made a sharp comment against Chinese financial authorities. As a result, there is a greater possibility that Ant Group’s plan, which promoted business expansion using synergy effects with startups such as fintech and exchange industries, will also fall in vain.

Reuters and Bloomberg News reported in December last year, citing several officials who requested anonymity that the China Securities Supervision Commission (SCRC) is considering forcibly ditching investments in some tech and fintech companies and financial industries owned by Ant Group. It was reported on the 31st (local time).

Ma Win, founder of Alibaba. [중앙포토]

Bringing together the reports from Reuters and Bloomberg, Chinese financial authorities recently set out to review the external investments Ant Group has made in recent years. Among them, the authorities plan to forcibly dispose of investment shares that “are not essential to the business.” It is not specifically known which investments are subject to compulsory disposal.

This is interpreted as a move after the financial authorities recently ordered Ant Group to close some deals. Bloomberg reported on December 27 (local time) last year that the People’s Bank of China (PBOC), the Banking Supervision Commission and the Securities Supervision Commission recently demanded against Ant Group that “the business must be completely reorganized.”

It is not clear whether there is a legal basis for financial authorities to forcibly sell Ant Group’s external investments. However, there is an analysis that Ant Group may induce the sale of some investment interests related to the financial industry through regulation while switching from a commercial bank to a financial holding company.

On the day, Bloomberg quoted an anonymous official, “(Ant Group’s) financial investments do not exceed 15% of net assets, the level currently regulated by the authorities. At the current level, switching to a financial holding company does not mean that it is necessary to sell finance-related investment stocks.

Home page of ‘Hello Bike’, a major Chinese bike-sharing company. Screenshot of ‘Hello Bike’ website

In accordance with the strict regulations of the financial authorities, the Ant Group’s decision to sell some of its investment shares was also detected. Reuters quoted an anonymous official on the day as saying: “Ant Group is in contact with private equity firms and is moving to sell its shares in the portfolio. Sales targets also include the Chinese bike-sharing company.” Hellobike. “It’s done.”

However, this is only a fraction of the investment share that financial authorities may require to sell to Ant Group. According to Reuters, Ant Group’s foreign investments total 81 cases, totaling $ 21.6 billion (23.5 billion won). More than half of them, 55 cases, are Chinese domestic institutions and companies, and their size is 17.4 billion dollars (18.9312 million won), which represents most of the investment. This included China Post and Savings Bank and China’s largest carpooling company, Didi Chushing.

As pressure from China’s financial authorities on Ma Yun intensifies, the position of Ant Group, which he owns, is expected to gradually shrink. Previously, Ant Group suffered the cessation of its IPO, which was expected to be worth $ 37 billion (KRW 40 trillion) in November last year. It was the order of President Xi Jinping, who was angered by Ma Yun’s sharp remarks to financial authorities in a keynote address at the Shanghai Bund Finance Summit last October.

Reuters said the day: “Ant Group has been promoting synergy effects (with existing businesses) through external corporate investments in recent years. If holdings invested abroad are sold, the influence of the fast-growing fintech industry in China shrinks significantly. I will. ”

Reporter Yoon Sang-eon [email protected]