- Fintech
- July 8, 2023
- 3 minutes read
Chinese Fintech Group Ant Fined $1B For Financial Violations
Ant Group, a Chinese fintech giant, has been hit with a significant fine. China’s central bank fined the company 7.1…
Ant Group, a Chinese fintech giant, has been hit with a significant fine. China’s central bank fined the company 7.1 billion yuan ($984mn) for alleged financial violations, it announced on Thursday.
- Ant Group is the fintech affiliate of Alibaba Group (NYSE: BABA), China’s biggest e-commerce company, previously led by famous entrepreneur Jack Ma. It operates Alipay, the world’s largest mobile payments network.
- Ant Group is one of China’s biggest technology companies and also one of the country’s noteworthy cautionary tales. In 2020, it was headed for a public listing expected to raise over $30bn. However, Ma commented negatively about Chinese regulators and the governing political party several days before the public listing. Soon after, he was summoned by regulators and the public listing was suspended, citing “major issues.” A crackdown followed.
- The fine caps three years of intense scrutiny from Chinese securities and banking regulators for Ant. Shares of Alibaba Group, Ant’s sister company, rose over 6% on Friday following the news of the fine (Alibaba owns a third of privately-held Ant Group).
The People’s Bank of China, the country’s central bank, said Ant violated regulations regarding consumer protection, anti-money laundering checks, corporate governance, and participation in banking and insurance activities. The fine includes confiscating illegally earned income, the central bank said.
Ant wasn’t the only major tech company hit with a fine by the central bank. Tencent Holdings (HKG: 0700), China’s biggest company by market value, was fined 2.99 billion ($414mn) for violations over its Tenpay payments platform.
- Shortly after the fine was announced, Ant Group disclosed plans to repurchase up to 7.6% of its shares for $6bn. The proposal values Ant at 567 billion yuan ($79bn), a 75% discount from the $315bn valuation it sought in its 2020 public listing.
- The repurchased shares will go to Ant Group’s employee incentive pool and provide liquidity for investors. Ant Group has raised $29bn in equity and debt funding, including over $4bn from state-owned corporations.
