China’s Ant Group receives approval to double its registered capital
Category: #tech  By Pankaj Singh   Date: 2023-01-05
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China’s Ant Group receives approval to double its registered capital

Ant Group, the Chinese financial services company and a subsidiary of Alibaba Group, has reportedly received approval to nearly double its registered capital, marking an indication that authorities' concerns are being addressed.

Apparently, Ant has been dealing with Chinese regulators to rebuild its operations since the unexpected withdrawal of its large IPO in late 2020. Alibaba controls 33% of Ant, which runs one of China's two major mobile payment apps.

Alibaba's shares in Hong Kong increased 8% on Wednesday. Meanwhile, New York-listed stocks closed 4.4% higher overnight.

In 2021, Ant began operating its consumer financing business as part of the restructuring.

The China Banking and Insurance Regulatory Commission announced on Friday that it had granted Ant's request to raise the consumer unit's registered capital from 8 billion yuan ($1.1 billion) to 18.5 billion yuan ($2.6 billion).

Based on the announcement, Ant will continue to own 50% of the consumer finance firm. Potential investors in the remaining half of the firm include Sunny Optical Technology and a Hangzhou government-backed company.

According to an associate law professor at NYU (New York University), Winston Ma this is a promising start of the stages that Ant Financial must undergo with its reconstruction process under the jurisdiction of the CBIRC and PBOC.

Reportedly, there is no clarity on the timing if any, is for reviving IPO plans. The People's Bank of China has also not yet granted Ant a license for a financial holding corporation.

Ant's credit companies Huabei and Jiebei are housed in the consumer unit. As per a prospectus, the so-called credit technology generated 28.59 billion yuan ($4.1 billion), or 39.4%, of Ant's income during the first six months of 2020.

As per China's banking regulator, the company was given six months to make the necessary improvements before the capital expansion approval was nullified.

Furthermore, the Chinese media had earlier reported the approval, the conditions of which had previously been made public.

Source credit: https://www.cnbc.com/2023/01/04/ant-gets-approval-to-expand-its-consumer-finance-business.html

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