Ant acquires permission to expand its consumer finance business

Ant Group’s consumer finance group has the allowance for more than double its registered capital, a sign of progress in resolving regulators’ concerns.

Since the abrupt suspension of its significant IPO in 2020, Ant has been working with Chinese people to restructure its business. Alibaba owns 33% of Ant, operating one of China’s two dominant mobile pay apps.

Alibaba’s Hong Kong-traded shares which have traded 8% higher Wednesday. Shares listed in New York closed 4.4% higher overnight.

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

The China Banking and Insurance Regulatory Commission stated that it approved Ant’s request to surge the amount of registered capital for the consumer group to 18.5 billion from 8 billion yuan on Friday.

According to the announcement, Ant will still hold a 50% stake in the consumer finance firm. New investors in the company’s other half include an entity backed by the Hangzhou administration and Sunny Optical Technology.

“This is a positive beginning of the steps Ant Financial needs to go through its restructuring process, the supervision of the CBIRC and PBOC,” stated Winston Ma, an adjunct law professor at New York University.

It remains to be seen what the timeline is for a revival of IPO plans. Ant has yet to get a financial holding firm license from the People’s Bank of China.

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

China’s banking regulator stated that the firm had six months to complete the changes before the money expansion approval became invalid.

Chinese media earlier reported the announcement of the approval, whose terms were publicly dismissed.