Chinese regulators probe Ant Group's equity investments, says report

Chinese regulators are reviewing equity investments held by Ant Group Co in dozens of companies, three people with knowledge of the matter said, intensifying a crackdown on billio­naire Jack Ma’s financial technology empire.

Regulators are considering whether to instruct Ant to divest some of its investments, mainly in technology and fintech start-ups, if they violate any rules such as creating unfair competition in the market, one of the three sources said.

Any enforced divestments would deprive the group of potentially lucrative investments, compounding existing regulatory pressure to revamp its business structure and put up more capital for its key consumer lending business.

Divestments would also significantly scale back Ant's influence over the country's fast-growing fintech industry, where it has sought synergies with its existing businesses via several investments in recent years.

China has been cracking down on anticompetitive behaviour in the country's booming internet sector. Regulators last week announced an antitrust investigation into Ant's sister firm Alibaba and ordered Ant to shake up its lending and other consumer finance operations.

A spokesman for Ant Group declined to comment after Reuters emailed the company questions about the regulatory probe.

The China Securities Regulatory Commission (CSRC), which two of the sources said was leading the probe, did not respond to a Reuters request for comment.

Regulators are looking into investments made by Ant over the past few years, the rationale behind such deals and their synergies, two of the three sources said. All three people declined to be named as they were not authorised to speak to the media.

Regulators want Ant, whose businesses include payment processing, consumer lending and insurance products distribution, to divest some of its investments unless they are indispensable to its business, according to one of the sources.

Ant has already started to tap prospective buyers including private equity firms for its holdings in more than a dozen of portfolio firms, including domestic bike-sharing start-up Hellobike, another of the sources said.

Hellobike declined to comment.

A fourth person with knowledge of the matter said Ant had not yet received any guidance from regulators about disposing its equity investments.

China caps bank loans to real estate to cut systematic risks

China’s regulators plan to cap banks’ lending to the real estate sector for the first time, in their latest efforts to guard against systematic risks and ensure financial stability after a series of property curbs in recent years did little to damp buyer enthusiasm.

 Under the new mechanism to take effect on Jan 1, 2021, loans to developers will be capped at 40% for the nation’s largest state-owned lenders while banks’ mortgage lending should be no more than 32.5% of their outstanding credit, the People’s Bank of China and the China Banking and Insurance Regulatory Commission said in a joint statement on Thursday. Those exceeding the cap will have a grace period of up to four years to meet the requirements. 

Bloomberg