Regulatory scrutiny has forced Hangzhou-based Ant Group to abruptly halt its large-scale IPO plans for 2020.
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BEIJING — Ant Group’s consumer finance division received approval to more than double its registered capital. This indicates progress in resolving regulatory concerns.
Since the abrupt halt to large-scale IPOs in late 2020, Ant has been working with Chinese regulators to restructure its business. Alibaba owns 33% of Ant, which operates one of his two dominant mobile payment apps in China.
Alibaba’s Hong Kong-traded shares traded 8% higher on Wednesday. The New York-listed stock closed 4.4% higher overnight.
Ant will launch a consumer finance company in 2021 as part of its restructuring.
On Friday, China’s Banking and Insurance Regulatory Commission said: Approved Ant’s request to increase the amount of registered capital In the consumer sector, from 8 billion yuan to 18.5 billion yuan.
According to the announcement, Ant will continue to hold a 50% stake in the consumer finance company. New investors in the other half of the company include entities backed by the Hangzhou government. sunny optical technology.
“This is a positive start to the steps Ant Financial needs to go through. [with] The restructuring process under the supervision of the CBIRC and PBOC,” said Winston Ma, adjunct professor of law at New York University.
It remains unclear what, if any, timeline for the resurgence of IPO plans. Ant has not yet obtained a financial holding company license from the People’s Bank of China. The company did not immediately respond to CNBC’s request for comment.
The Consumer segment includes Ant’s credit businesses Huabei and Jiebei. So-called credit tech contributed 28.59 billion yuan, or 39.4%, to Ant’s revenue in the first half of 2020, according to the prospectus.
China’s banking regulator said it would take six months for the company to complete the changes before its capital expansion approval was revoked.
Chinese media had previously reported news of the approval, the terms of which had previously been made public.
— CNBC’s Arjun Kharpal contributed to this report.
