Chinese regulators are reportedly planning to reduce the fine on Ant Group by around 25% from the initially proposed amount of over $1 billion, as they aim to conclude the multi-year crackdown on prominent technology firms. Sources familiar with the matter revealed that the current fine being considered is approximately 5 billion yuan ($728 million).
The People's Bank of China (PBOC), which has been overseeing Ant's restructuring since its $37 billion IPO was halted in 2020, is expected to announce the fine in the coming months, according to two sources who requested anonymity due to the information not being public. The PBOC and Ant Group, founded by billionaire Jack Ma, have not yet commented on the matter.
This reduced fine would potentially clear the way for the fintech giant to obtain a long-awaited financial holding company license, pursue growth, and eventually revive its plans for a market debut. The decision on the Ant Group fine would signify a significant step towards the end of China's stringent crackdown on private enterprises, which began with the cancellation of Ant's IPO and resulted in the loss of billions in market value for Chinese companies.
The smaller fine aligns with the Chinese government's recent shift towards a more lenient stance on the private sector. This change in tone is in line with China's efforts to boost confidence among private entrepreneurs and stimulate growth in the $17-trillion economy, which has been severely impacted by the COVID-19 pandemic.
One of the sources stated that Chinese regulators have been considering lowering the fine since at least January and have been informally discussing the matter with Ant Group. Additionally, authorities are considering softening the language of the charges against Ant Group, according to two sources.
The revised fine is now expected to focus on financial risks and Ant Group's operation of certain businesses without proper licenses. Previously, the fine was anticipated to be centered on alleged violations related to the "disorderly expansion of capital" and the corresponding financial risks caused by its once-unregulated businesses.
The sweeping business overhaul that Ant Group has been undergoing since April 2021 includes its transformation into a financial holding firm, subject to regulations and capital requirements similar to those for banks.
Ant Group, which operates the Alipay super-app, has a diverse range of businesses that include payment processing, consumer lending, and insurance product distribution. As part of the ongoing restructuring, Ma, who previously held over 50% of voting rights at Ant, announced in January that he would relinquish control of the company.
