Ant Group is considering moving its online finance services to a holding company that can be regulated like any other, news reports said Wednesday quoting people familiar with the matter.
Concerned with Ant's expansion into consumer lending and wealth management, China's regulators derailed its $37 billion initial public offering in November and have since sought to contain the expansive e-commerce companies of founder Jack Ma.
Ant should "set up a holding firm according to law," China's central bank said Tuesday in reference to the financial technology group's involvement in securities and insurance.
It isn't known what Ant businesses will become part of the holding company.
The idea has been floated before. In its August initial public offering prospectus, Ant suggested it might set up a unit - Zhejian Finance Credit Network Technology Co. - to apply for a financial holding license but didn't specify which parts of the company would be involved.
The move would bring the financial technology company into line with regulatory demands - but at a price.
Ant's $315 billion valuation at the time of its now-delayed dual listing was based on the company's structure as a vendor to financial institutions - and not a financial entity in its own right. As a traditional company Ant is worth less to investors.
Likewise, the founder of Ant parent company Alibaba Group Holdings Co. Ltd. has seen his personal wealth decline under pressure from mainland financial authorities. Ma's net worth has been in decline since November when the Ant Group initial public offering first came under regulatory scrutiny.
American depositary shares in Alibaba Group Holding Ltd. are expected to open Wednesday in New York at $238.37 - up 0.89% on its last close. The price of Alibaba paper rose 7.23% to $238.43 during Tuesday trade after falling substantially the day before. The price of American depositary shares in Alibaba fell Monday in New York to close at $235.44 on Ant Group's troubles.
The issue was last trading in Hong Kong at HK$234.20 - down a little on its HK$234.80 opening price. Alibaba's stock closed 8% lower Monday in Hong Kong - hitting its lowest since July.
Alibaba's value is under its 50-day moving average of $262.18 and way under its 200-day moving average of $266.62.
After peaking at $61.7 billion, his personal value dropped to $50.9 billion - putting the entrepreneur at 25th place on the Bloomberg Billionaires Index of the 500 wealthiest people in the world.
China's laissez-faire attitude toward local internet finance companies and applications, which enabled companies like Alibaba and Tencent to monopolize the industry, is on the wane.
And in a continued effort to assert control over Ma's financial interests, Mainland authorities are allegedly looking at taking a larger stake in his businesses according to a report by The Wall Street Journal based on conversations with China officials.