China’s Ant Group, the fintech giant that faced setbacks with its planned $37 billion IPO last year, is undergoing a significant revamp. The company will restructure itself as a financial holding company in response to increased regulations in the platform economy. This decision comes shortly after Ant’s affiliate, Alibaba Group Holding Ltd, was hit with a $2.75 billion antitrust penalty.

As part of the settlement, Ant Group will restructure its operations and transform into a financial holding company. These changes, along with other restrictions, are expected to impact the company’s profitability and valuation. In response, Ant Group has stated its commitment to meeting the requirements set by authorities, including establishing a personal credit reporting business and merging its two main lending businesses.

The People’s Bank of China has emphasized the need for Ant Group to sever any improper connections between its payments service, virtual credit card business, and consumer loan unit. It has also stressed the importance of breaking Ant’s monopoly on information and complying with credit information business regulations. Additionally, Ant Group has agreed to enhance its corporate governance and address any illegal financial activities as requested by the central bank.

The central bank has further urged Ant Group to manage its leverage and product risks, as well as control the liquidity risk of its flagship fund products. This includes reducing the size of its massive Yu’eBao money market fund. These measures reflect a broader initiative by the Chinese government to regulate the platform economy and ensure fair competition.

The move has been praised by the state-backed Economic Daily newspaper as an example of financial regulation in the platform economy. The enforced restrictions aim to promote transparency, fairness, and stability within the financial sector. Ant Group will now need to navigate these changes and adapt its business model accordingly. This development is likely to have a significant impact on China’s fintech industry and shape the future direction of Ant Group’s operations.

Useful links related to the article:
1. Reuters: China’s central bank says Ant Group to restructure as financial holding company
2. Yahoo Finance: Ant Group must become a ‘steel rod’ in restructuring after fine, says central bank