Ant gets approval to expand consumer finance business

The regulatory review forced Hangzhou-based Ant Group to abruptly suspend plans for a massive IPO in 2020.

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BEIJING — Ant Group’s consumer finance unit has received approval to more than double its registered capital, a sign of progress in addressing regulators’ concerns.

Since the abrupt suspension of its massive IPO in late 2020, Ant has been working with Chinese regulators to restructure its business. Alibaba owns 33% of Ant, which operates one of the two main mobile payment apps in China.

Hong Kong-traded shares of Alibaba rose 8% on Wednesday. New York-listed shares closed up 4.4% overnight.

Ant launched its consumer finance company in 2021 as part of the restructuring.

On Friday, the China Banking and Insurance Regulatory Commission said it had approved Ant’s application to increase the amount of registered capital of the consumer unit to 18.5 billion yuan from 8 billion. yuan.

Ant will still own a 50% stake in the consumer finance company, according to the announcement. New investors in the other half of the company include a Hangzhou government-backed entity and Sunny optical technology.

“This is a positive start to the steps Ant Financial needs to take [with] its restructuring process under the supervision of the CBIRC and the PBOC,” said Winston Ma, adjunct professor of law at New York University.

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It remains unclear what the timeline, if any, is for a relaunch of IPO plans. Ant has not yet received a financial holding license from the People’s Bank of China. The company did not immediately respond to a CNBC request for comment.

The consumer unit houses the credit businesses of Ant, Huabei and Jiebei. According to a prospectus, the so-called credit technology contributed 28.59 billion yuan, or 39.4%, to Ant’s revenue in the first six months of 2020.

China’s banking regulator said the company has six months to complete the changes before the capital expansion approval becomes invalid.

Chinese media previously reported the news of the approval, the terms of which were previously made public.

– CNBC’s Arjun Kharpal contributed to this report.

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