February 8, 2023

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Ant gets approval to expand its consumer finance business

Regulatory scrutiny has forced Hangzhou-based Ant Group to abruptly put plans for a massive IPO in 2020 on hold.

Vcg | China Optical Group | Getty Images

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

Since the sudden suspension of a massive IPO in late 2020, Ant has been working with Chinese regulators to restructure its business. Owns Alibaba 33% antwhich operates one of the two dominant mobile payment applications in China.

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

Ant launches her consumer finance company in 2021 As part of the restructuring.

On Friday, the China Banking and Insurance Regulatory Commission said so He agreed to Ant’s request to increase the amount of registered capital For the consumer unit, to 18.5 billion yuan from 8 billion yuan.

According to the announcement, Ant will still own 50% of the consumer finance company’s shares. 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 forward [with] Winston Ma, an assistant professor of law at NYU, said his restructuring process is under the supervision of the CBIRC and PBOC.

It remains unclear what the timeline, if any, is for reviving the 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.

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

The Chinese banking regulator said the company has six months to complete the changes before approval of the capital expansion becomes invalid.

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

— CNBC’s Arjun Kharpal contributed to this report.