After having its $37 billion dual IPO pulled by Beijing, Jack Ma’s Ant Group is working fast to overhaul operations to comply with government regulations, The Wall Street Journal reported on Friday (Jan. 15).
Ant, spun off from Alibaba in 2014, was set to list on the Shanghai and Hong Kong stock exchanges in November until regulators stepped in and suddenly pulled the plug.
The company has now established a task force to deal with the problems identified by regulators, Chen Yulu, deputy governor of the People’s Bank of China, told the media at a press briefing, per WSJ. The company is keeping the lines of communication open and establishing a time frame to make changes, he noted.
China has been reeling in tech companies and handing down new financial regulations, targeting Ant Group, the world’s biggest tech company, in particular. Chinese financial regulators called Ma and his leadership team to answer questions on the eve of the company’s stock market debut.
New regulations instituted in September 2020 mandate that tech firms set up a separate holding company for financial services and products.
Ant has so far had little to say regarding the planned changes, the timetable or when it might try again for a listing. The company was told by Chinese financial regulators at a Dec. 26 meeting that Ant should return to its original core business of payments and focus on correcting issues in the areas of personal lending, wealth management and insurance.
“Ant and the regulators are probably going back and forth behind the scenes to fix its business,” FinTech industry consultant Richard Turrin told WSJ.
China is cracking down on tech companies that offer consumer-focused financial services. The country’s central bank ordered companies like Ant and Tencent to regularly turn over financial data so it can be widely shared. The company’s finance platform, Alipay, has reams of data on users’ spending, borrowing and lending habits and histories.
Ant is considering the development of a separate unit dedicated to consumer lending. The company currently has two lending units that handle consumer loans, Huabei and Jiebei.