Ant Receives Green Light to Broaden Its Consumer Finance Services

The consumer finance division of Ant Group has been given the green light to increase its registered capital by more than double, indicating that the company is making progress in addressing the worries of regulators.

In late 2020, Ant's highly anticipated IPO was suddenly put on hold. As a result, the company has been collaborating with Chinese authorities to reorganize its operations. Ant is owned by Alibaba, and it is one of the two major mobile payment apps in China.

On Wednesday, Alibaba's Hong Kong-traded shares saw an 8% increase in value. Additionally, the company's shares listed in New York rose by 4.4% during the previous night.

In 2021, Ant initiated a reorganization of its business operations, which included the launch of its consumer finance company.

The China Banking and Insurance Regulatory Commission announced on Friday that they had granted Ant's request to raise the registered capital for their consumer unit to 18.5 billion yuan, up from 8 billion yuan.

The announcement stated that Ant will maintain a 50% ownership in the consumer finance company. The other half of the company will be owned by a Hangzhou government-backed entity and Sunny Optical Technology.

Winston Ma, adjunct professor of law at New York University, commented that the restructuring process of Ant Financial, which is being overseen by the CBIRC and PBOC, is off to a good start.

At this time, it is uncertain when, or if, Ant Group will resume its plans for an initial public offering. The People's Bank of China has yet to grant the company a financial holding company license. When contacted by CNBC for a statement, Ant Group did not provide a response.

Ant's consumer unit is home to their credit businesses Huabei and Jiebei. During the first half of 2020, credit tech was reported to have contributed 28.59 billion yuan, which is equivalent to 39.4% of Ant's total revenue, as stated in a prospectus.

The banking regulator in China declared that the firm had a period of six months to finish the modifications before the capital growth authorization became invalid.

Previously, Chinese media outlets reported the news of the approval of a certain agreement, the terms of which had been made public.