The dispute between the Chinese supervisors and the Chinese technology company and Alibaba holding Ant Group seems to be coming to an end.
China fined the company 7.12 billion yuan (900 million euros), the Chinese central bank announced on Friday in Chongqing. Other companies like Tencent were also fined. For Ant in particular, however, a possible end to years of regulatory hassle could open up prospects for growth and the previously planned IPO. This was stopped by the supervisors in 2020.
According to the Chinese central bank, the background to the fines are violations in the areas of payment transactions, billing, anti-money laundering and the distribution of funds. A financial platform of the Chinese technology group Tencent therefore has to pay almost three billion yuan. The companies have solved most of the problems, the Chinese central bank said in a statement. She also reportedly confiscated “illegal income.”
Alibaba shares rose more than three percent on the Hong Kong stock exchange. The notes are also listed in New York, where they were up 3.5 percent on Friday compared to Thursday’s closing price. Alibaba holds a third of Ant’s shares. Alibaba’s stock market value has lost over half a trillion euros since regulators laid eyes on Ant’s plans. Some observers even classified China as “uninvestable” because of the critical attitude of head of state Xi Jingping’s Communist Party towards the private sector.
With the punishment that has now been pronounced, investors are hoping that Ant and Alibaba will end their lengthy dispute with the supervisors. They’ve been a burden on billionaire founder Jack Ma’s empire for years. As a next step, Ant could apply for a financial holding license, reignite growth, and rekindle plans for an IPO.
For some time now, there have been increasing signs that Beijing’s tough stance on technology companies is being eased. However, Ant is still waiting for a license that would classify the company more like a bank and thus lead to a different type of supervision. Among other things, the company operates the mobile payment service Alipay, which is popular in China.
In autumn 2020, shortly before its planned mega IPO in the United States, Ant was targeted by the Chinese authorities – as were other tech companies that wanted to raise capital in the United States or had already done so. In this context, China had criticized, among other things, the allegedly inadequate protection of consumer data and referred to national security aspects.
The crackdown by Chinese regulators was also credited with causing founder Ma to relinquish control of Alibaba in January. He fell out of favor and has since largely withdrawn from the public eye.
In March, Alibaba announced a deep restructuring and the split into six divisions. The aim should be to boost its own growth and to create a group of independent market leaders in areas ranging from cloud computing and logistics to international trade. The plan was considered a great vision by long-time CEO Daniel Zhang, who for his part had to resign a good two weeks ago. He will be succeeded by Eddie Wu from mid-September.
Investors reacted with relief that a
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CHONGQING/HONG KONG (dpa-AFX)
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