Ant Group to form holding company overseen by Chinese central bank

Ant Group (formerly Ant Financial), which owns payment platform Alipay and operates a loan marketplace, plans to roll out a series of reforms in response to concerns from Chinese regulators.

Why should we care?
Ant Group is China’s largest payment provider, which has more than 730 million monthly users through Alipay. In November of last year, Chinese President Xi Jinping decided to halt the IPO of Ant Group – which would have been the world’s biggest – over worries about systemic risk and privacy issues. But China’s central bank governor Gang Yi later said the door was still open for an IPO providing Ant meets certain conditions. This week, Ant unveiled plans to become a financial holding company that will be overseen by China’s central bank, and it will sketch out a path for restructuring operations. This means Ant could be subject to strict capital requirements, reminiscent of those banks and insurers must satisfy. It remains to be seen whether Ant can continue growing and expanding its offerings at the same pace while being subject to this enhanced oversight, and there are concerns the requirements may impact revenue and profits.