The regulatory scrutiny forced Hangzhou-based Ant Group to abruptly suspend its massive IPO plans 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 resolving regulators’ concerns.
Since abruptly suspending 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 China’s two dominant mobile payment apps.
Hong Kong-traded Alibaba shares traded 8% higher on Wednesday. New York-listed shares ended up 4.4% overnight.
Ant launched its consumer finance company as part of the 2021 restructuring.
On Friday, the China Banking and Insurance Regulatory Commission announced that it had approved Ant’s application to increase the registered capital for the consumer unit from 8 billion yuan to 18.5 billion yuan.
According to the announcement, Ant will retain a 50% stake in the consumer finance company. New investors in the other half of the company include a Hangzhou government-backed company and Sunny Optical Technology.
“This is a positive start to the steps Ant Financial must take [with] its restructuring process under the oversight of CBIRC and PBOC,” said Winston Ma, associate professor of law at New York University.
It remains unclear what the timeline for a revival of IPO plans is. Ant has yet to obtain a financial holding company license from the People’s Bank of China. The company did not immediately respond to a CNBC request for comment.
The consumer unit houses Ant’s credit companies Huabei and Jiebei. According to a prospectus, the so-called lending technology had 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 expires.
Chinese media previously reported on the permit, the terms of which were previously publicly disclosed.
— CNBC’s Arjun Kharpal contributed to this report.