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How jack ma grew himself from ashes and became what he is today?

Ant Group Co. can survive the 11th-hour suspension of its $35 billion blockbuster listings in Shanghai and Hong Kong if the firm will benefit from its technology peers.

If one thing that founder Jack Ma and Chinese regulators are likely to agree on is that finance and technology make for a strong mix. The combination is where they were in trouble. Stopping the initial public offerings as a result of the “change in the regulatory environment” is the government’s way of asserting that Ant is more fin than tech. Ma and the team are not going to get away with being robotic cowboys running roughshod over the financial system.

Alibaba Group Holding Ltd., which holds a third of Ant, suffered an instant knock on Tuesday, sliding a record 9.7 percent for its New York-listed stock, down as high as 9.3 percent on Wednesday in Hong Kong. A new listing date may be at least six months away, as Ant needs to respond to the requirements of regulators and file a new prospectus, the Financial Times said, citing those directly involved in the transaction.

Having so much money might not be a true sin—as Deng Xiaoping famously said, getting rich is glorious. Yet getting so much control over the nation’s financial levers is intruding on government territories. The state-owned banks of China are a policy instrument. Not only does Ant run the growing payment network, Alipay, but its loans and asset management firms have grown to dominate their rivals.

China’s financial regulator aims to prohibit lenders from using Ant’s channels, which serve as a guiding force for bank loans to customers, Bloomberg News published on Wednesday, citing people who are familiar with the matter that it did not mention. It looks very poor on the floor. But ensuring that banks comply with new regulations is something we will expect from the regulator and place pressure on Ant’s executives to rapidly get their own business model into line.

As my colleague Shuli Ren pointed out, Ma’s remarks last month at the Bund Summit in Shanghai seem to have contributed to the suspension. He contrasted China’s banks with pawnshops demanding ample money to back loans. Ant’s model is notoriously distinct, relying more on reams of consumer data to handle risk. Ma described the financial system as following rules designed by the Old People’s Club, and said that the country needs “policy experts, but not red tape experts.”

The way forward appears to be clear. Rather than closing down Ant or scuppering the IPOs entirely, Beijing is likely to force major changes to its business model.

Tencent Holdings Ltd. and Baidu Inc. know how it works: reflect, confess, and renovate. They got through regulatory hiccups by coming out more patriotic than ever before. To grasp what Ant could look like after the dust has settled, let’s consider Beijing’s longer-term goals.

One is to roll out the blockchain of the central bank. As my colleague Andy Mukherjee has pointed out, the growth of fintech in areas such as money market funds and wealth management has contributed to the risk accumulating in shadow banking. One of the government’s policies behind a digital token is to put the playing field back to existing lenders who have been trailing technology in some ways. Expect Ant to accept the virtual yuan-backed currency.

Another aim is to extend the monitoring status, where data tells every part of everyday life. More dubious applications include monitoring people, cracking down on dissension, and implementation of behavioral norms. But maintaining the digital footprint of the economy will contribute to productivity in the distribution of resources, lending funds, and even managing supply chains. Fintech supporters contend that the modern structure would not need to obey old laws.

Ant and Beijing are likely to meet in the middle of the day. This week, regulators outlined new draft regulations for the industry, including Basel-style capital requirements. As a result, Ant will need to provide at least 30% of the financing for the loans it makes. This figure is currently close to 3.5%, with a capital requirement of about $14 billion, according to estimates by Jefferies analysts Shujin Chen and Alfred He. While this could be a minor drain on earnings, it shouldn’t be a concern for Ant, considering that the IPOs were set to collect 2.5 times that amount.

We can also see Ant supplying regulators with greater access to its data as a means of demonstrating that its model can help handle risk when showing them how to do stuff. In exchange, Beijing will have better access to knowledge that it can use to develop a larger model of the economy and its people.

Jack Ma himself is likely to be the ultimate shift. Companies also speak of key-man vulnerability in terms of how a company will struggle if the linchpin executive exits. For Ant, this dilemma is reversed: it may be the obligation to stick on.

China’s second-richest man has already backed away from Alibaba after pulling so much of the attention away from government officials. He no longer has an official role in e-commerce. But he holds voting rights and a major stake in Ant. As with Alibaba, Ma is expected to place his large assets in a philanthropic trust, set up charities and think tanks, and disappear from public life.

Ant will then emerge from his IPO ashes like the patriotic fintech phoenix that Beijing eventually seeks.



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