Ant approved to expand its consumer finance business

BEIJING — Ant Group’s consumer finance division has been approved to more than double its registered capital, a sign of progress in addressing regulatory concerns.

Since its massive IPO was abruptly suspended in late 2020, Ant has been working with Chinese regulators to restructure its business. Alibaba owns 33% Antsoperates one of China’s two dominant mobile paid apps.

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

Ant to launch consumer finance company in 2021 as part of the restructuring.

On Friday, China Banking and Insurance Regulatory Commission said approved Ant .’s request to increase registered capital for the consumer unit, from 8 billion yuan to 18.5 billion yuan.

According to the announcement, Ant will still hold a 50% stake in this consumer finance company. 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 go through [with] Its restructuring process is under the supervision of the CBIRC and the PBOC,” said Winston Ma, an associate professor of law at New York University.

The timeline, if any, for the resurgence of IPO plans is unclear. Ant has yet to receive 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 unit includes Ant’s credit businesses Huabei and Jiebei. 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 a prospectus.

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

Chinese media had previously reported on the approval, the terms of which had been made public before.

— Arjun Kharpal of CNBC contributed to this report.