Ant IPO possible if issues resolved: China's central bank

BEIJING • Ant Group could resume its plans for an initial public offering (IPO) once problems are resolved, China’s central bank chief said, offering some relief to global investors seeking signs on what the future holds for the world’s largest fintech giant.

People’s Bank of China (PBOC) governor Yi Gang said relevant agencies are still investigating issues related to monopolies at billionaire Jack Ma’s Ant Group, adding that the matters were “complicated” and some risks concerned consumer privacy. To resolve the problems, regulators need a clear legal framework, Mr Yi said on a panel at the World Economic Forum on Tuesday.

“I would say that this is a process, and also once the problem is solved, it will go back to the track to continue consideration according to law,” Mr Yi said in English.

When asked whether that means an IPO, he said that if the company follows the legal structure, “you will have the result”.

Chinese regulators are asking Ant to work on a timetable to overhaul its business after abruptly halting its US$35 billion (S$46.4 billion) IPO last November.

The fate of Mr Ma’s sprawling fintech empire remains uncertain after China issued a slew of draft rules that threatened to curb growth for some of Ant’s most lucrative businesses.

The message from Mr Yi is the latest sign that Ant has avoided a worst-case scenario where it needs to shutter its businesses completely.

Mr Ma resurfaced this month, ending a months-long period away from public view that fuelled intense speculation about his plight.

He addressed teachers last week via a live stream during an annual event to commend rural educators, talking about how he will spend more time on philanthropy.

The co-founder of Alibaba Group Holding and Ant did not mention his recent run-ins with Beijing during his address.

Last Friday, China’s banking regulator said recent measures that have hit Ant hard were not aimed at any specific company.

While regulators stopped short of directly asking for a break-up of the company last month, the central bank stressed that Ant needs to “understand the necessity of overhauling” and come up with a timetable as soon as possible.

MONOPOLY RISKS

PBOC deputy governor Pan Gongsheng said in an op-ed in the Financial Times yesterday that regulators are trying to strike a balance between encouraging fintech innovation and preventing financial risks.

“Network effects mean that fintech competition often leads to ‘winner-takes-all’ outcomes including market monopolies and unfair competition,” he wrote.

Uncertainty remains for several of Ant’s businesses, including consumer loans, crowdfunded health-care, and payments.

The central bank said last week that any non-bank payment company with half of the market in online transactions, or two entities with a combined two-thirds share, could be subject to antitrust probes, according to draft rules.

If a monopoly is confirmed, the central bank can suggest the Cabinet impose restrictive measures such as breaking up the entity by business type. Firms already with payment licences would have a one-year grace period to comply with the new rules.

China’s insurance and banking regulator said last week it would analyse the risks of Internet companies’ crowdfunding healthcare operations and take necessary measures. Ant said the same day that the chief architect of its healthcare business, which is known as Xiang Hu Bao, had resigned.

Meanwhile, Ant’s consumer loans business could need more capital to comply with draft rules that place more stringent requirements on its lending units.

Ant needs to inject at least 70 billion yuan (S$14.35 billion) of new capital just for its credit-lending business, Bloomberg Intelligence analyst Francis Chan estimated last month. That calculation is based on draft rules that require Ant to co-fund 30 per cent of loans, with a maximum asset leverage of five times.

BLOOMBERG

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