The decision was partly fueled by deepening regulatory pressure on Ant Financial’s business lines such as credit rating, payments and microlending. Yet, technology services is becoming a larger part of Ant Financial’s sales. In five years, that line is could make up 65 percent of the company’s revenues. By comparison, the company’s technology services were approximately 34 percent of revenues in 2017. At the same time, financial service revenue is estimated to decrease from around 11 percent to 6 percent.
The news comes as Ant Financial is set to close a $10 billion private fundraising round that would value the company at $150 billion. The company has been preparing to go public, and it looks like this could be the biggest IPO in history. With that in mind, The Wall Street Journal had reported that, as part of the deal, investors putting money in the FinTech company must agree not to invest in or raise their stakes in companies controlled by rivals, such as Tencent, JD.com, online services company Meituan-Dianping and eCommerce company Pinduoduo.
“For a company that claims not to worry about us, they sure spend an awful lot of time worrying about us,” said a spokesman for JD.com.
Though it’s usually investors who set conditions for companies before handing over funds, the restrictions placed by Ant Financial show its significant market power, as well that of its affiliate, Alibaba Group. In addition, the move shows the high demand for Ant’s shares. Sources said that some investors were rejected because they weren’t offering enough money or had backed Tencent-linked companies.
Ant owns mobile and online payments network Alipay, which is used by more than half a billion people in China. The company also fulfills loans to individuals and companies, sells insurance and investment products, and has other financial businesses. It generated $2 billion in pre-tax profit last year.