China Set to Fine Ant Group for More Than $1 Billion

Beijing is set to impose a fine of more than $1 billion on Chinese tech giant Ant Group, setting the stage for ending the company’s two-year long regulatory overhaul. The fine will be imposed by the People’s Bank of China (PBOC), which has been driving the revamp at Ant Group after the company’s $37 billion IPO was shattered at the last minute in November 2020. The central bank had been in talks with the company over the past few months about the fine. It is expected to announce the fine as soon as the second quarter of 2023.

A fine on Ant could help pave the way for the company to secure a long-awaited financial holding company license, as its regulatory headaches could end. The company could also look to grow again, and eventually revive its plans for a public market debut.

The fine would be the largest from Beijing on a Chinese internet company since ride-hailing firm Didi Global was fined $1.2 billion in July.

The fintech firm’s affiliate, e-commerce titan Alibaba Group last year received a record fine of 18 billion yuan ($2.51 billion) for antitrust violations.

The fines are part of China’s sweeping crackdown on tech companies that have cut hundreds of billions of dollars off their values.

But Chinese authorities have in recent months softened their tone on the tech crackdown amid efforts to bolster an economy that has been hurt by the COVID-19 pandemic.

A fine will likely focus on Ant’s alleged violations relating to a “disorderly expansion of capital” and the corresponding financial risks its once freewheeling businesses have caused.

In November 2020, Chinese authorities abruptly slashed Ant’s IPO, which was set to be the world’s biggest soon after founder Ma publicly criticized China’s regulatory system for stifling innovation.

Since then, Beijing has been trying to rein in Ma’s business empire, starting with the antitrust probe into Alibaba. Ma, one of China’s most successful and influential businessmen, has largely remained out of public view since the crackdown.

Ant has been formally undergoing a sweeping business overhaul since April last year, which includes turning itself into a financial holding firm, subject to rules and capital requirements similar to those for banks.

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