(Bloomberg) -- Ant Group Co.’s profit rose to $3.4 billion in the December quarter after Chinese regulators thwarted its record initial public offering and told it to scale back its sprawling business.
Billionaire Jack Ma’s fintech giant contributed nearly 7.2 billion yuan to Alibaba Group Holding Ltd.’s earnings, a company filing showed Thursday. Based on Alibaba’s one-third stake in Ant, that translates to 21.8 billion yuan ($3.4 billion) in profit, up 50% from 14.5 billion yuan in the previous three months. Ant’s earnings lag one quarter behind Alibaba’s. Ant declined to comment.
The tally underscores the earnings powers Ant boasted before authorities demanded China’s largest fintech company fold its financial business into a holding company, curtailing its growth prospects. Regulators have issued a battery of proposals that threaten to curb Ant’s dominance in online payments and scale back its expansion into consumer lending and wealth management.
While Chairman Eric Jing has promised staff that the company will eventually go public, it’s likely to be worth much less than before the crackdown that saw the IPO halted in November. Fidelity Investments halved its valuation estimate for Ant to about $144 billion in February, compared with $295 billion assigned in August.
Ant isn’t alone in facing the clampdown. The government imposed wide-ranging restrictions on the financial divisions of 13 companies including Tencent Holdings Ltd. and ByteDance Ltd. Units of JD.com Inc., Meituan and Didi Chuxing were also among companies summoned to a meeting where regulators handed out stricter compliance requirements in April.