Ant Group Co. and Chinese regulators have agreed on a restructuring plan that will turn Jack Ma’s fintech giant into a financial holding company, making it subject to capital requirements similar to those for banks, Bloomberg reported.

The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas such as blockchain and food delivery, people familiar with the matter said. One of Ant’s early proposals to regulators had envisioned putting only financial operations into the new structure.

An official announcement on the overhaul could come before the start of China’s Lunar New Year holiday next week, the people said, asking not to be identified discussing private information. Alibaba Group Holding Ltd., which owns about a third of Ant, erased losses in Hong Kong trading on Wednesday after Bloomberg reported the agreement. Alibaba rose 3.5% in New York.

Some market participants had been speculating Ant might be forced to spin off portions of its business, which now looks unlikely, said Shujin Chen, Hong Kong-based head of China financial research at Jefferies Financial Group Inc.

Ant’s restructuring plan marks the first big step in what’s expected to be a lengthy overhaul process, as regulators draw up detailed capital requirements and other guidelines for companies that span multiple financial business lines.

China only introduced its framework for financial holding companies in September and many of the specifics are still being ironed out. While the rules will eventually provide more regulatory clarity for Ant, they’ll almost certainly force the company to slow the torrid pace of expansion that has made it China’s dominant fintech player and one of the world’s most valuable startups.

Ant is still exploring possibilities to revive its initial public offering, which was abruptly halted by regulators in November, one person familiar with the matter said. But given the financial holding company framework is so new, it’s unclear how long it might take for authorities to sign off on a listing.

Francis Chan, a Bloomberg Intelligence analyst in Hong Kong said in December that Ant’s valuation could plunge below $153 billion as a result of the changes it will undergo as a holding company. The company was above $300 billion in November, before its IPO was halted.

As part of the overhaul plans, Ant and at least a dozen banks are paring back their years-long cooperation on consumer lending platforms that fuel the spending of at least 500 million people in China.

Ant declined to comment. The People’s Bank of China, which oversees financial holding companies, didn’t immediately respond to a faxed request for comment by Bloomberg.

Ant’s restructuring is part of a broader government campaign to increase supervision of the financial and technology sectors. Regulators have in recent months targeted everything from health-care crowdfunding to consumer lending. In January, they proposed measures to curb market concentration in online payments, where Ant and Tencent Holdings Ltd. are the biggest players.

Ant made the move to restructure into a holding company as a way to calm nerves in the faceoff between the company and Chinese authorities. Under the financial holding company structure, Ant’s businesses would likely be subject to more capital restrictions, potentially limiting its ability to lend more and expand at the pace of the last few years.

The agreement means that China has succeeded in its attempt to control the online financial sector. With Ant going holdco to ensure cooperation with the Chinese regulatory authorities, more moves are expected from the government in the near future to curb other sectors of its economy with unauthorized measures of freedom.

The news of a possible solution has softened the faces of wary investors who were caught in the Chinese power play. However, it is not clear what this will mean for Ant’s valuation and IPO. Chan estimates now that the valuation could drop below $108 billion.

This is one of our new courses in Tekedia Institute. In a time when most regions in the world are under severe physical security paralyses, I do think it makes sense for business leaders and professionals to pause and understand the physical risk elements, and how to manage them.

Yes,  we have the computer risk (cybersecurity). We have the finance one (accounting, auditing, etc). But most times, business schools leave the human ones. We think that is a big miss. If thugs can attack American senators which if not that it was in America, CNN would have reported the meltdown as a “coup”.

In Nigeria today, even the soldiers have dropped their cars, preferring trains between Abuja and Kaduna route. Simply, physical security has assumed a bigger dimension and we need to understand the nexus from experts!

In Week 12 of our program,  Henry Mgbemena, Global Security Adviser of World Vision International, will teach a course on Physical Security Risk Management. When insecurity has been scaled in the land, what are the strategic options and what should you do?

Register here as we start on Monday, Feb 8.

In the last edition of Tekedia Institute Mini-MBA, our site crashed on Day 1 as members surged to begin our academic festival. Our technical team has promised me that it would not happen again. We have this scaling thing which is supposed to organically adjust for traffic. Good People, at 12 noon on Monday Lagos time, go to the Board and let us begin an excursion into knowledge.

I hold 7 degrees across disciplines including doctorate in banking & finance, and engineering – and I understand many things. Unlike in the past where we had focused mainly on companies, in this edition, we have added courses on the PERSON. Yes, if the person is great, companies will become great. That is why the Human Productivity Innovation course is there. Yes, if we teach innovation, we must also be innovative as a business school.

Get ready – let us learn, APPLY, and advance our missions. I am so excited because we have something really amazing.

At 12 noon, be here – school.tekedia.com

To win in the 21st century digital business, you must invest to control and influence demand. What are your plans to do just that? Facebook can open any digital business it wants in the world because it has demand ( billions of citizens within its Facebook planet). 

If you do not understand that fundamental construct, you will struggle on your scaling playbook. No idea is really new and the web has removed information asymmetry to a large extent, making it possible for users to discover products and services. So, the playbook changes from who supplies the product to who can I discover easily. 

As Facebook moves into the Nigerian ecommerce, with the demand it has, expect new vistas of growth for the social media empire.

Again, what is your strategy to control and influence demand in your digital venture? I have a video.

In the digital age, what matters is not who controls supply, but who controls demand. Supply is largely infinite as there are many ways to get to the web, and because it is infinite, users congregate to platforms to help them navigate and make sense of the web.

In 1980, before the digital age as we have it today, the most powerful people in media were newspaper publishers. They were the people you needed to reach to get your message to the world. They decided what everyone read on the dailies and they were powerful. They controlled supply and by controlling supply, they shaped everything including advertising.

Facebook Inc has launched an ecommerce business on its own planet – the Facebook. And when that happens, expect a huge level of dislocation in the ecosystem. Yes, “Facebook has unveiled a new marketplace in Nigeria, a buying and selling point where people can search, buy and sell items in their local communities. According to a statement released Wednesday by the social media platform, Nigeria has become the latest African nation to join the market where South Africa, Ethiopia and Kenya are already trading.”

“Sellers and merchants are responsible for complying with all applicable laws and regulations. For high-value items (example: watches, luxury bags), consider requesting a certificate of authenticity or proof of purchase.

“If you’re not satisfied with an item’s condition or have doubts about its authenticity, you can decline to complete the purchase. If the seller offers to ship the item rather than exchanging it in person, keep in mind that you may not have the opportunity to verify the item before completing your purchase.

“If you are meeting, ensure this is in a public place. Don’t invite buyers or sellers into your home. Before going to the agreed location, tell a family member or a friend the exact location where you will meet, bring your cell phone, and consider asking another adult to come with you.

Jiji, OLX and other classified portals will experience a new dimension of competitive attacks. If people are already on Facebook and Facebook can offer them what you are offering, how do you expect them to leave Facebook for you? Every player in the marketplace must have an answer on this Facebook’s moat!

After the latest WhatsApp terms and conditions upgrade, I noted here that Facebook was planning to use WhatsApp as a clearing house for Facebook.com since WhatsApp has one thing other platforms do not have: phone numbers. Those phone numbers are verified and secured with biometrics which means once Facebook can sync WhatsApp backend to Facebook.com, its community and marketplace can allow people with WhatsApp accounts to buy, pay and checkout with minimal fraud! Sure, mess up and Facebook will give out your phone, not email address! Your phone is linked to your National Identity Number (NIN), and suddenly, there is no hiding place.

So, Facebook Nigeria Marketplace is here, and WhatsApp pay will be overlaid on it, making it possible that payments can happen at scale. This is a huge challenge ahead for ecommerce companies especially those running marketplaces. Even Jumia and Konga may not be smiling right now!

But I have laid out a strategy in Harvard Business Review: do not pursue a frontal response, go through the flank by collaborating with Facebook since it is not likely you will thrive if you want to go against it head-on.

Yet, at the end of all, customers will be better service because they will get many things free, and fraud will drop, since Facebook has your WhatsApp-linked phone and integrity will be deepened. But what I am not sure is this: if there would be other marketplaces in Nigeria except Facebook by 2024!