By
Darya Rudz
November 1st, 2023
At the moment, Ant’s restructuring push has been positively signaled by the CBIRC.
Ant Group, one of China’s biggest private financial technology companies has received a positive nod from Chinese regulators to expand its consumer finance business. As reported by CNBC, the China Banking and Insurance Regulatory Commission (CBIRC) revealed that on Friday, it approved the expansion of the registered capital for the unit from 8 billion Yuan to 18.5 billion Yuan.
The application to expand this capital comes off as one of the major attempts by Ant Group to restructure its business in order to have a smoother alliance with finance regulators. Approving the request is a major sign that the regulator is somewhat loosening its harsh stance with respect to the firm.
Ant Group operates the Alipay app, one of the two dominant payment gateways in China. The company’s influence had grown over the years and in what looks like a move to crush the monopoly, regulators started cracking down on the firm. The restructuring will see new co-owners or investors make their way into the spun-off Consumer Finance unit.
Alibaba Holdings Group Holdings Ltd (HKG: 9988) owns a 33% stake in the larger Ant Group entity and after the restructuring, the retail and tech giant will still retain as much as 50% of the new unit. Other marked investors include but will not be limited to an organization backed by the Hangzhou government and Sunny Optical Technology (Group) Co. Ltd (HKG: 2382).
“This is a positive start of the steps that Ant Financial needs to go through [with] its restructuring process under the supervision of the CBIRC and PBOC,” said Winston Ma, adjunct professor of law at New York University.
Following the news, Alibaba shares in Hong Kong jumped by a massive 8.74% to HKD96.40.
Ant Group and the Standing with the PBoC
At the moment, Ant’s restructuring push has only been positively signaled by the CBIRC. The People’s Bank of China (PBoC) is yet to make a move to show that it is in alignment with the company’s restructuring plans as Ant Group as a firm has not been granted the financial holding company license at this time.
The approval of the capital expansion also comes with a notably strict timeline and according to the CBIRC, Ant Group will have to ensure that the consumer finance unit implements all of the detailed changes in its restructuring plans within the next 6 months.
There are ongoing speculations that the notable headway with the CBIRC is one of the most ambitious moves Ant Group has scored with regulators since its Initial Public Offering (IPO) was thwarted in late 2020. Had Ant Group been allowed by Chinese regulators to go public at the time, the listing would have been the biggest in the world at the time. Whether or not this approval will be a precursor to finally going public is one fact that is yet to be uncovered.