China Expected to Cut Fine on Ant Group to About $700M: Sources
Chinese regulators are expected to fine Ant Group about a quarter less than the more than $1 billion initially planned and downgrade their charges against it, sources said, as they seek to end a years-long crackdown on marquee technology firms.
Chinese authorities, notably the People’s Bank of China (PBOC) which has been driving a revamp at Ant after its $37 billion IPO was scuttled in 2020, are expected to announce the fine in the coming months, two of the people said.
Ant Group Founder to Give Up Control in Major Overhaul of Chinese Fintech Giant
The PBOC and Ant, founded by billionaire Jack Ma, did not immediately respond to a Reuters request for comment.
The fine would help pave the way for the fintech giant to secure a long-awaited financial holding company license, seek growth, and eventually revive its plans for a market debut.
For the broader technology sector, an Ant fine decision will mark a key step towards the end of China’s bruising crackdown on private enterprises that started with the scrapping of Ant’s IPO and has wiped billions off market values of Chinese companies.
A smaller fine following the recent return to China of Ant’s founder Ma, who stayed overseas for more than a year since the IPO fiasco, offers support for Beijing’s softening tone toward the private sector.
That would also be in sync with China’s efforts to bolster confidence among private entrepreneurs and spur growth in the $17-trillion economy battered by COVID-19, the sources said.
China’s economy grew just 3% in 2022, one of its worst showings in decades, but gathered pace early this year.
A lower fine could also help reduce any negative impact on Ant and the fintech sector given the scale of Ant’s business and its significance to the industry, the people added.
The amount of the fine is, however, still subject to changes, they cautioned.
Regulators have since at least January been considering reducing the fine and have been in informal communication with Ant about it, one of the people said.
Softer Wording on Charges
Apart from lowering the fine, authorities are also looking to soften the wording of their charges against Ant, two of the people said, in a move that is likely to further quell concerns of China’s private sector.
Authorities now plan to cite financial risks and operating certain business without proper licenses as the triggers for the fine, the people added.
Earlier, the fine was likely to be focussed on alleged violations related to “disorderly expansion of capital” and the corresponding financial risks its once freewheeling businesses caused, a source told Reuters in November.
Ant has been undergoing a sweeping business overhaul since April 2021, which includes turning itself into a financial holding firm, subject to rules and capital requirements similar to those for banks.
Just a day after Ma’s return to China in March, Alibaba said it was planning to split into six units and explore fundraisings or listings for most of them, a move seen by investors as a signal Beijing’s regulatory crackdown on corporates was ending.
Ant, which operates super-app Alipay, has businesses spanning payment processing, consumer lending and insurance products distribution.
Ma, a former English teacher, previously owned more than 50% of voting rights at Ant, but in January the fintech giant said he would give up control of the company as part of the revamp.
($1 = 6.8719 Chinese yuan)
(Reporting by Julie Zhu and Jane Xu; additional reporting by Kane Wu; editing by Sumeet Chatterjee and Himani Sarkar)
Photograph: This Oct. 26, 2020 file photo, shows a view of the signage of Ant Group in the headquarters compound of the fintech giant in Hangzhou in eastern China’s Zhejiang province. (Chinatopix Via AP, File)
Related:
- Chinese Regulators Approve Capital Raise of $1.5B for Ant Group
- China to Fine Ant Group More Than $1B as Regulatory Revamp Nears End: Sources
- TikTok Must Face Lawsuit Over 10-Year-Old Girl’s Death, Appeals Court Rules
- Insurtech Root, Goosehead Partner on Tech Integration for Independent Agents
- Police Officer’s Family Sues Girlfriend Accused of His Death and Bars That Served Her
- Americans Shop Around for Insurance More Than Ever as Costs Soar