Input 2020.12.28 12:53 | Revision 2020.12.28 12:54
I didn’t mention corporate dissolution and nationalization, but couldn’t rule out the possibility
Chinese government seized and dismantled management rights without 1% stake in Anbang Insurance
Electronic payment already saturated… Factors for the decline of Ant Group’s growth potential
As the corporate value declines and the IPO is difficult to resume until next year
Chinese regulators warned the fintech conglomerate Ant Group to “focus on its own payment business.” Concerns are being raised that the case of home insurance, which publicly disassembled private enterprises by the authorities to protect the rights and interests of consumers, will be reproduced.
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The Chinese government, which has been generous to the Ant Group and other Internet giants, suddenly introduced a strong regulatory policy.They expanded their scope to business fields other than their main business, and their economic and social influence increased to the point that threatened the Chinese Communist Party, which would become a threat to the financial market. It seems that the judgment that it is possible has worked.
The Chinese authorities only mentioned to Ant Group to “go back to the full-time payment business,” but it is difficult to rule out the possibility of corporate dissolution and nationalization. This is because there is a precedent that the Xi Jinping administration ordered the sale of assets or dismantled them altogether, seeing as a national risk factor for companies that rapidly grew in size or expanded non-core businesses.
A prime example is the private company’s home insurance, which went through the liquidation procedure this year. The company was once China’s largest private insurance company with assets of 2 trillion yuan (336 trillion won), but in 2018, when the former chairman was sentenced to 18 years for corruption, the government took over management rights without a 1% stake. It was dismantled in the first place.
It is not known what triggered this radical action. Insurance industry officials believe that home insurance’s business method is highly likely to have been viewed as a risk factor to the Chinese authorities. Anbang Insurance made profits by aggressively buying overseas assets by selling mid- and short-term asset management insurance products that existing insurance companies do not sell.
When it took over the management rights of home insurance, the Chinese authorities heard the cause that “the company violated the insurance law, jeopardizing the ability to pay and jeopardizing consumer rights and interests.” Vice-president Pan argued that Ant Group also violated consumer rights and interests by not meeting regulatory compliance requirements and causing unfair competition.
Some analysts say that even if the Chinese government does not demand corporate dismantling, Ant Group’s growth potential has already been greatly damaged. Ant Group started out as Alibaba’s electronic payment business, spin-off in 2011, and then expanded into micro-loans, asset management and insurance brokerage businesses. This is because the electronic payment market is saturated.
“Ant Group’s growth potential will stagnate as it returns to payment business,” said Chen Shu-jin, an analyst at Jeffrey Financial Group in Hong Kong. “In mainland China, the online payment business is saturated, and Ant Group’s market share has risen to its limit.”
The future of the Alibaba Group, the parent company of Ant Group, is also uncertain. As Chinese regulators launched an antitrust investigation last week against the Alibaba Group, according to the draft antitrust laws released in November, authorities could fine up to 10% of their sales on companies that they found “violate consumer interests”. have.
The enterprise value of Ant Group was estimated to be $300 billion (328 trillion won) just before IPO in November, but it is expected to be lowered. Bloomberg said the company’s executives expect to be able to convince financial authorities to resume IPOs, but it will be difficult to resume IPOs before 2022.
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