Jack Ma’s Ant Group has reached a deal with Chinese regulators to restructure its business after they raised issues that halted its $37bn initial public offering last year, according to several people familiar with the situation.

The proposed restructuring will involve Ant placing all of its major businesses, including its technology units, inside a financial holding company to comply with a new regime implemented by the People’s Bank of China in November.

The change, which is likely to be announced before the Chinese new year holiday begins on February 11, according to two of the people familiar with the process, will leave China’s largest mobile payments company subject to stricter capital requirements, making it more like a bank than a tech company.

Chinese regulators, with the agreement of President Xi Jinping, suspended Ant’s blockbuster Hong Kong and Shanghai IPO in November, about a week after Mr Ma, Ant’s controlling shareholder, gave an ill-timed speech criticising China’s state-owned banks and regulators.

A person close to the company, who declined to be named, said it would take several months to complete the overhaul. “Business will definitely be impacted,” he added. “The actual impact will depend on how strictly we follow the new online lending rule.”

Another person close to the situation said he did not expect regulators to sign off so quickly after Ant submitted its restructuring plan. But “that’s China”, he added.

Ant declined to comment on the potential restructuring. The news was first reported by Bloomberg.

The company’s Alipay app has more than 700m monthly users who use it to swipe to pay, take out loans, insurance and manage their money. Alibaba’s results on Tuesday showed Ant remained wildly profitable in the third quarter of last year, earning an estimated Rmb14.5bn in profit, before its listing was suspended.

Ant reported a net profit of Rmb21.9bn in the first half of 2020.

Beijing had flagged its intention to require companies such as Ant to establish financial holding companies in September with the announcement of new regulations, a year after draft rules for such companies were made public.

Ant is likely to need to raise capital to satisfy the PBoC rules for financial holding companies, which, along with requirements on capital adequacy, risk control and governance, make the holding vehicles more akin to banks than tech companies.

Adding to regulatory uncertainty, authorities have yet to release a finalised version of draft online lending regulations that would require internet lending platforms like Ant to fund at least 30 per cent of each loan they make from their own balance sheet.

Lawyers had warned that the new rules would force an overhaul of Ant’s business model and that draft regulations for online lending needed to be concluded before Ant could take a second run at its IPO in Shanghai and Hong Kong.

Analysts have estimated the new rules could put a substantial dent in the company’s revenues and reduce Ant’s valuation from anywhere between 10 and 50 per cent, with harsher regulations weighing more heavily on the funds raised by a resuscitated IPO.

Hong Kong-listed shares in Alibaba swung from a loss of 4 per cent to a slight gain on Wednesday on news of Ant’s deal.