Jack Ma's Ant Mulls Creating Holding Company To Resolve Regulatory Crisis: Report

Alibaba Group Holding Ltd BABA-backed Ant Group is considering a holding company framework for its financial operations, Bloomberg reported late Monday.

What Happened: The new company would be regulated similarly to a bank, which could stymy the growth of its most profitable units, people familiar with the matter told Bloomberg.

Any units that require a financial license would be moved into the new holding entity, as per Bloomberg’s sources.

Alibaba shares traded nearly 6.5% higher at press-time in Hong Kong.

Why It Matters: Chinese regulators including those from the country’s central bank met with Ant executives this month and asked the fintech to “rectify” how it conducts business, as per Reports.

The regulators are reportedly targeting Ant’s lending, wealth management, and insurance services and would rather the company stick to its traditional business of facilitating payments. 

In November, Ant IPO — expected to be the largest in history — was suspended by Chinese authorities.

Price Action: Alibaba shares closed nearly 0.2% higher at $222.36 on Monday and gained 0.85% in the after-hours session in New York.

Related Links: 'You Can Take Any Of The Platforms Ant Has,' Jack Ma Told Beijing Amid IPO Scrutiny: WSJ

Photo courtesy: World Economic Forum via Flickr