By Julie Zhu
HONG KONG (Reuters) – Chinese language regulators are reviewing fairness investments held by Ant Group Co Ltd in dozens of corporations, three individuals with data of the matter stated, intensifying a crackdown on billionaire Jack Ma’s monetary expertise empire.
Regulators are contemplating whether or not to instruct Ant to divest a few of its investments, primarily in expertise and fintech start-ups, in the event that they violate any guidelines similar to creating unfair competitors out there, one of many three sources stated.
Any enforced divestments would deprive the group of doubtless profitable investments, compounding current regulatory strain to revamp its enterprise construction and put up extra capital for its key client lending enterprise.
Divestments would additionally considerably cut back Ant’s affect over the nation’s fast-growing fintech business, the place it has sought synergies with its current companies through a number of investments in recent times.
China has been cracking down on anticompetitive behaviour within the nation’s booming web sector. Regulators final week introduced an antitrust investigation into Ant’s sister agency Alibaba and ordered Ant to shake up its lending and different client finance operations.
A spokesman for Ant Group declined to remark after Reuters emailed the corporate questions in regards to the regulatory probe.
The China Securities Regulatory Fee (CSRC), which two of the sources stated was main the probe, didn’t reply to a Reuters request for remark.
Regulators are wanting into investments made by Ant over the previous few years, the rationale behind such offers and their synergies, two of the three sources stated. All three individuals declined to be named as they weren’t licensed to talk to the media.
Regulators need Ant, whose companies embody cost processing, client lending and insurance coverage merchandise distribution, to divest a few of its investments until they’re indispensable to its enterprise, in accordance with one of many sources.
Ant has already began to faucet potential consumers together with personal fairness companies for its holdings in additional than a dozen of portfolio companies, together with home bike-sharing start-up Hellobike, one other of the sources stated.
Hellobike declined to remark.
A fourth particular person with data of the matter stated Ant had not but acquired any steering from regulators about disposing its fairness investments.
Chinese language regulators have set about reining in Ma’s monetary and e-commerce empires since he publicly criticised the nation’s regulatory system in October for stifling innovation. That set off a series of occasions that in the end torpedoed Ant’s $37 billion IPO, which might have been the world’s largest, in November.
ANT UNDER PRESSURE
Ant traces its beginnings to Alipay, which was launched in 2004 as a cost service, and is 33% owned by Alibaba.
The fintech titan based and managed by Ma has made a complete of 81 fairness investments, together with in a Chinese language state financial institution and an Indian digital cost processor, price $21.6 billion, in accordance with Refinitiv information.
Greater than half its investments – 55 offers price $17.4 billion – have been made at house, together with the Postal Financial savings Financial institution Of China, the nation’s largest financial institution by variety of branches, and high ride-hailing agency Didi Chuxing.
Ant is contemplating folding most of its monetary companies, together with client lending, right into a holding firm that might be tightly regulated like conventional monetary companies, Reuters reported on Tuesday.
Reuters reported in early December that Ant was contemplating promoting its 30% stake in Indian digital cost processor Paytm amid tensions between the 2 Asian neighbors and a toughening aggressive panorama.
Paytm and Ant had at the moment stated the knowledge was incorrect. Ant referred Reuters to its earlier assertion whereas Paytm didn’t instantly reply to a request for touch upon Thursday.
(Reporting by Julie Zhu in Hong Kong and Zhang Yan in Beijing; Further reporting by Cheng Leng in Beijing; Modifying by Sumeet Chatterjee and Jane Wardell)