Photo = REUTERS
Ant Group, a fintech company affiliated with Alibaba Group, has decided to convert into a financial holding company that is strongly supervised by the financial authorities. As the future growth potential is greatly reduced, the prospect is raised that the corporate value will also decrease.
The Wall Street Journal (WSJ) reported on the 27th (local time) that it had submitted a business reform proposal to the authorities stating that Ant Group would become a financial holding company, citing sources. Financial holding companies that have a financial company as a subsidiary are obligated to undergo strict management and supervision by the financial authorities.
Ant Group has grown rapidly by operating Alipay, a payment service for e-commerce company Alibaba. Alipay’s mobile payments are currently used by over 1 billion people in China. Based on this huge user base, Ant Group entered the financial industry and has emerged as the largest Chinese operator in micro-loans, online insurance, and asset management.
Ma Yun, the founder of Alibaba and the largest shareholder of Ant Group, has argued that Ant Group is a fintech company, not a financial company, and should be subject to low-level regulations appropriate for this. In October, publicly speaking, he criticized the financial authorities’ conservative oversight policy, but on November 3rd, two days before Ant Group’s listing, the listing was halted.
In September of last year, Chinese financial authorities introduced a regulation that chaebol group-affiliated financial companies must establish a financial holding company regulated by the financial authorities in order to continue the financial industry. In addition, financial holding companies were required to invest 50% or more of the capital of affiliated financial subsidiaries.
After listing, Ant Group plans to establish a separate financial holding company that has jurisdiction over financial companies, and the parent company remains as a fintech-related technology company such as blockchain, artificial intelligence (AI), and big data to maximize corporate value.
However, if Ant Group itself is converted to a financial holding company, such targets will inevitably be revised. S and Prasat Cornell University professor of economics said, “Antegroup has a side that has hidden risks without being properly supervised while conducting various financial industries. If it is regulated by the financial authorities, it may have difficulty entering new businesses.” did.
WSJ pointed out that if the business reorganization proposal submitted by Ant Group is confirmed, various regulations, such as paying a huge amount of capital to financial holding companies, should be observed. It also predicted that profit and growth would be limited, which would have a negative impact on corporate value.
It is reported that the proposal for business reform submitted by Ant Group will be confirmed before the Lunar New Year holiday next month after review by the Financial Stability Development Committee, the government’s top financial policy organization, led by Deputy Prime Minister Liu Heo.
Beijing = correspondent Kang Hyun-woo [email protected]
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