The tech subsidiary of e-commerce giant JD.com reportedly plans to launch a financial holding company amidst a push from Chinese authorities for greater adoption of the business form in order to expedite scrutiny of the fintech sector.
Sources said to Bloomberg that JD Technology plans to establish a financial holding company which will be subject to heightened regulatory requirements more akin to those applied to Chinese banking sector institutions.
The sources said that the holding company will be kept separate from JD Technology’s tech operations, and will see JD Technology retrench staff members as well as likely withdraw from prior investments.
The reports arrives just after JD Technology withdrew its application for an IPO on the STAR Market Board of Shanghai Stock Exchange.
JD Technology posted revenues of 10.3 billion yuan (USD$1.6 billion) in the first half of 2020, with consumer credit vehicles Jintiao and Haitian accounting for around a quarter of sales.
Chinese authorities have been pushing for greater adoption of the financial holding company form in order to expedite their efforts to regulate the domestic fintech sector.
In September the State Council launched new regulations on financial holding companies, while in December a central bank official said that they would be the “way of the future” for regulation of Chinese fintech giants.
Jack Ma’s Ant Group reached an agreement with regulators in February to convert into a financial holding company, just months after authorities scuppered its mammoth IPO on the Shanghai and Hong Kong bourses that was originally scheduled for the start of November.
At the end of March Chinese Internet company Sina also announced that it would convert into a financial holding company following its withdrawal from the NASDAQ Stock Exchange.