Chinese regulators, it seems, did not crush the hopes and dreams of Jack Ma’s Ant Group when they stopped a planned initial public offering and slapped restrictions on fintech companies.
In the quarter following the clampdown, Ant’s profit moved up to $3.4 billion with the company contributing nearly 7.2 billion yuan to Alibaba Group Holding Ltd.’s earnings, according to a company filing on Thursday.
Alibaba’s one-third stake in Ant means a profit 50 percent higher than the previous quarter’s 14.5 billion yuan.
And just imagine what the money-making machine could have accomplished without the changes Ant was forced to make. Authorities required Ant – the largest financial tech company in China – to include its financial business as part of a holding company.
The restrictions severely limited Ant’s growth prospects in the field of online payments, consumer lending and wealth management.
Bloomberg reported that Beijing’s restrictions hit the financial divisions of 13 companies including Tencent Holdings Ltd. and ByteDance Ltd., and that JD.com Inc., Meituan and Didi Chuxing were among companies affected as regulators placed increased compliance requirements on businesses in April.
Though the hope is for Ant to seek another IPO, the overall value won’t be nearly so high as it was prior to the restrictions.
Fidelity Investments’ recent February valuation, cited in the Bloomberg story, was $144 billion, compared with $295 billion in August.
And Alibaba reported its first loss in nine years, vowing to hike spending for expansion next year in technology and community commerce.
According to Bloomberg: “Jack Ma’s flagship e-commerce firm swung to a 5.5 billion yuan ($852 million) net loss — its first since 2012 — after the company swallowed a $2.8 billion fine for monopolistic behavior imposed by Beijing.”
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