(Please read §5 that this is the Alibaba share on Wall Street)
HONG KONG (Reuters) – Chinese authorities on Friday fined Ant Group 7.12 billion yuan (902 million euros) for violating consumer protection and corporate governance laws, putting end to the regulatory overhaul of the group that has been going on for years.
The People’s Bank of China (PBC), which spearheaded Ant’s reorganization after its failed $37 billion IPO in late 2020, announced the sanction on its website.
The fine is one of the highest ever imposed on a technology company in China and its announcement will allow the “fintech” to obtain a financial holding license, to seek again to generate growth and to revive, to term, its IPO project.
For China’s tech sector, the fine marks a key step in ending the brutal corporate crackdown that began with the cancellation of Ant’s proposed IPO.
The Wall Street-listed stock of Ant’s parent company, e-commerce giant Alibaba, rose 3.3% in pre-market trading.
RESTORING CONFIDENCE
Steps taken by the Chinese government to “finalize sanctions, clarify outlook and draw clear limits on compliance are key to stabilizing private sector confidence”, according to Rukim Kuang, founder of Beijing-based Lens Consulting. .
The businesses of Ant, founded by billionaire Jack Ma, include payment processing, consumer lending and the distribution of insurance products. In mid-2020, before its IPO was canceled, Ant was valued by some investors at over $300 billion.
Since April 2021, Ant has been undergoing a major restructuring of its business, including plans to become a financial holding company, which would subject the group to rules and capital requirements similar to those of banks.
The announcement of the fine comes as the ruling Chinese Communist Party appointed central bank deputy governor Pan Gongsheng as party secretary at the PBC, a move that presages his appointment as governor, according to two political sources.
He is a key figure behind Ant’s restructuring and has attended several meetings with the company about it, the sources say.
The National Financial Regulatory Administration (NFRA), a new government body under the Council of State, is now the lead regulator responsible for licensing Ant, the sources said.
The NFRA did not immediately respond to a request for comment from Reuters. The BPC did not immediately respond to a request for comment on Pan Gongsheng’s role.
RETURN OF JACK MA TO CHINA
The sources had previously said that the amount of the fine had been revised to at least 8 billion yuan. Reuters had reported in April that regulators were looking at around 5 billion yuan.
The fine imposed on Ant is the largest sanction imposed on a Chinese technology company since the $1.2 billion fine imposed last year by the Chinese cybersecurity regulator on the road transport company Didi Overall.
Alibaba was fined a record 18 billion yuan in 2021 for antitrust violations.
Chinese authorities are looking to bolster private sector confidence as the economy struggles to recover despite the end of health restrictions.
It also follows the return of Jack Ma to China, who returned at the start of the year after spending many months abroad.
Jack Ma previously held more than 50% of Ant’s voting rights, but in January relinquished control of the group as part of its reorganization.
(Report Julie Zhu, Jane Xu, Jason Xue, French version Corentin Chapron with Laetitia Volga, edited by Kate Entringer)
Copyright © 2023 Thomson Reuters