Ant Group plans restructuring in march to Hong Kong IPO

Ant Group plans to carve out noncore parts of its business in a restructuring, Bloomberg reports.

Why it matters: Ant needs to streamline operations and get on the right side of regulators as part of its march to a public listing.

Driving the news: Ant Group reportedly plans to divest its blockchain, database management services and international business.

• After that divestment, the remaining entity will apply for a financial holding license in China, at which point it would be regulated more like a bank.
• Once that license is secured, Ant would prepare an initial public offering in Hong Kong.

Context: The restructuring is just one part of the process necessary for Ant Group to revive its IPO plans.

• Earlier this month, Ant Group was fined close to $1 billion by Chinese regulators, giving hope that the government’s crackdown on the company was coming to a close.
• It subsequently announced a share repurchase plan through which it would buy back up to 7.6% of its equity interest.

Between the lines: The share buyback values the firm at around $79 billion, a huge step down from the $300 billion it had been valued at in its abandoned IPO filing.

• As a result, major Ant Group shareholders like Alibaba, which owns 33% of the company, plan to stay on the sidelines.

Yes, but: Some Chinese state-owned firms that participated in early funding rounds could cash out, Bloomberg reports.

• Early investors include China’s National Council for Social Security Fund and China Development Bank Capital, which invested in a 2015 round valuing the company at around $45 billion.