Jack Ma's Ant Group profit rises 39% on investments

[SINGAPORE] Ant Group's profit rose an estimated 39 per cent in the June quarter, attributed to a gain in investments as billionaire Jack Ma's fintech giant grapples with the impact of China's rapidly shifting rules for private enterprise.

The company contributed 6.5 billion yuan (S$1.4 billion) to Alibaba Group Holding's earnings, a filing showed on Thursday (Nov 18). Based on Alibaba's one-third stake in Ant, that translates to an estimated 19.71 billion yuan in profit, up 39 per cent from a year earlier. Ant's earnings lag one quarter behind Alibaba's. Ant declined to comment.

"The year-over-year increase in share of profit of Ant Group was mainly due to an increase in net gains arising from fair value changes in the investments held by Ant Group," Alibaba said in its statement.

Executives are grappling with how to carve the sprawling firm into separate ventures with state-backed partners, people familiar with the plans have said. While regulators led by the central bank have handed down broad guidelines, they've been short on details, leaving Ant to proceed by trial and error, the sources have said.

In the wake of China's yearlong crackdown on the tech industry, firms are seeking to turn the focus away from increasing sales and more towards sustainability and philanthropy - key pillars of President Xi Jinping's drive to reshape China's economy.

Ant's US$35 billion initial public offering was snuffed out by China just over a year ago, and optimism about a speedy revival of the plans has faded while lofty valuation estimates that once reached US$300 billion have been cut by as much as two-thirds. The overhaul of Ant runs deep. Its ubiquitous super-app Alipay, a one-stop shop for the financial needs of a billion users, is on the brink of being sliced up, while its treasure trove of consumer data is to be thrown open to rivals for a fee.

As part of the overhaul, Ant has ramped up its capital base to 35 billion yuan and is moving to build firewalls in an ecosystem that once allowed it to direct traffic from Alipay to services such as wealth management, consumer lending and on-demand neighborhood services and delivery.

China kicked off a campaign to rein in its tech giants last year with curbs on fintech and an antitrust probe into Alibaba that culminated in a US$2.8 billion fine. Since then, nearly all aspects of the Internet sector have come under greater scrutiny.

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