The financial market on Ant Group Co. fell to $2.1 billion in the March quarter, after Chinese regulators left its record initial public offering thwarted and ordered it to overhaul its sprawling operations.
Alibaba's fintech giant donated nearly 4.5 billion yuan to the earnings of Billie Jack Ma, a company filing showed Tuesday. Based on Alibaba's one third stake in Ant, that translates to 13.6 billion yuan profit, down 37% from the previous three months. Alibaba's earnings lag one quarter behind Ant's. Ant declined to comment.
The fall in profit underscores the challenges facing Ant after a widespread crackdown on China's most powerful technology corporations. In response, the country's largest fintech agreed to turn itself into a holding company that would be less like a bank. Regulators have also issued a battery of proposals that threaten to strip off Ant's dominance in online payments and curb its expansion into consumer lending and wealth management.
China has expanded its net of crackdowns, now expanding tightening to everything from ride-hailing and edtech, to food delivery and monopolistic practices in music streaming. The policies shook the global investor, sparking a $100-billion selloff.
Chairman Eric Jing has promised staff that the company will eventually go public, though it is likely to be worth much less than before the crackdown that began last year. Fidelity Investments halved its valuation estimate for Ant in February to about $144 billion, compared with $295 billion in August.
While China's hands-off approach to the technology sector has minted billionaires and wealthy companies at a breathtaking pace, President Xi Jinping's government is now reining in the country's most powerful corporations along with their ultra-rich founders.
In late July, China ordered more than two dozen tech companies to carry out internal inspections and address issues such as data security. Ant was about to go public before regulators stopped him in November 2020.
Regulators said Ant's consumer finance unit about two months ago as part of its overhaul, which limiting the company's ability to lend at its own and in partnership with banks. The operation folds in its two most well-known consumer lending businesses, Huabei and Jiebei. The unit will need to make 30% of funding for all co-loans, based on rules made earlier in the year. At 10 times the leverage of its registered capital, that means its total amount of joint lending will be capped at 266 billion yuan.
The company's affiliate Alibaba reported revenue of $31.8 billion, but missing estimates and suggesting plans to hike spending in pursuit of growth have yet to gain traction.