(Bloomberg) -- Billionaire Jack Ma’s Ant Group Co. likely saw profits rise an estimated 21% in the three months to September, despite a regulatory overhaul as part of Beijing’s efforts to rein in the nation’s fast growing tech giants.
The fintech firm contributed 5.81 billion yuan ($912 million) to Alibaba Group Holding Ltd.’s earnings, a filing showed Thursday. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 17.6 billion yuan in profit for Ant’s September quarter, or 21% increase from a year earlier. Ant’s earnings lag a quarter behind Alibaba’s. Ant declined to comment.
The higher profit was mainly due to an increase in net gains from investments held by Ant Group, according to the filing.
The results come just days after Chinese authorities told the nation’s largest state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Ant in a sign of renewed scrutiny, according to people familiar with the matter.
China kicked off a campaign to rein in its tech giants after snuffing out Ant’s $35 billion initial public offering in late 2020. The crackdown has snowballed into an assault on every corner of China’s technosphere as Beijing seeks to end the domination of a few heavyweights and create a more equitable distribution of wealth.
As part of the government-ordered restructuring, Ant has ramped up its capital base to 35 billion yuan and moved to build firewalls in an ecosystem that once allowed it to direct traffic from Alipay, with a billion users, to services like wealth management, consumer lending and delivery. Consumer loans jointly made with banks were split from its “Jiebei” and “Huabei” brands. Assets under management at its money-market fund Yu’ebao -- once the world’s largest -- dropped by more than a third last year to 765 billion yuan by December.
Alibaba on Thursday reported the slowest revenue growth since it went public, underscoring how China’s crackdown on its technology sector is taking a financial toll on the e-commerce giant.
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