Ant Group and its subsidiary businesses, alongside other Chinese companies, have been at the epicenter of laws and regulations propagated by Chinese regulators for quite a long time now. Ant Group is at the center of a new decision by regulators yet again.
Ant Group’s Alipay will see the business broken up into separate units; one of which will offer financial services that have been offered previously and the new unit will be a separate business for the fintech giant’s loan business, a Monday report by Financial Times said.
While citing people familiar with the matter, the Financial Times report said that the plan to create a separate unit for Alipay’s loan business entails turning over user data relating to its loan business and decisions over to the new venture which will now become an independent credit scoring joint venture. The new joint venture will, however, be partly state-owned.
Alipay had previously received an order from regulators to split its business operations from lending businesses Huabei and Jiebei. Following the Financial Times report, Ant Group’s e-commerce subsidiary Alibaba’s Hong Kong-listed shares fell 4 percent on Monday. Tech companies in China have been faced with decisions from regulators which have affected their operations in one way or the other. The decline faced by Ant Group’s shares weighed in on the tech sector as the Hang Seng Tech index was down more than 2 percent. Shares of other Chinese companies listed in the Hong Kong market had their share of this decline. Meituan, for example, was down 4.47 percent and that of Tencent was down 2.45 percent at the close.
Ant Group and Zhejiang Tourism Investment own about 35 percent each of the credit-scoring joint-venture, hence the decisions from regulators. The report by Financial Times also stated that Ant Group will not be the only company affected by the new rules given by regulators.
The decision from regulators will pose huge challenges for Ant Group’s business. Already, its $34.5 billion IPO planned for November has been affected by several decisions from regulators.
Shares of Ant’s Group e-commerce affiliate – Alibaba, listed in Hong Kong have declined more than 30 percent since the start of this year as of Monday’s close.