Ant Group IPO could be back on track through deal with Chinese regulator

Ant Group, the digital payments company spun out of Alibaba by CEO Jack Ma, which he also founded, could be set to revive its record IPO. Plans for the fintech group to go public last November in a massive $34 billion capital raise were dashed just days before the planned date after China’s banking regulator raised concerns over its consumer loans business. But a deal that would allow it to go ahead may be at hand.

Ant Group’s proposal is to restructure itself as a financial holding company, allowing it to package the consumer loans business in a way that will meet regulatory approval. All of the group’s current interests from food-delivery to blockchain would have to be folded into the new structure.

Reports suggest the new corporate structure could be announced as soon as next week, hopefully resolving tensions between Mr Ma and China’s banking and financial services regulator.

Mr Ma spun Ant out of Alibaba, China’s largest ecommerce company and often referred to as the ‘Chinese Amazon’. The company was initially created to house the Alipay mobile wallet, still its biggest product. But it has since diversified into numerous businesses and products from insurance, consumer loans and investments to ride-hailing and food delivery.

Last November’s planned IPO was set to value Ant at a whopping $300 billion but stock market analysts believe having to restructure the company as a financial holding will significantly reduce that valuation. Under China’s financial services regulations, Ant as a financial holding will be subject to tighter supervision than would have been the case in its current format.

However, it appears to be the only realistic compromise that would allow the IPO to go ahead in the near term. China’s financial watchdog blocked Ant’s planned dual listing on both the Shanghai and Hong Kong exchanges due to concerns about the loosely regulated nature of its current consumer loans business.