CBIRC division in Chongqing green-lit the company’s plan, which contributed RM3.4b as part of the plan, will control half of its shares after the deal 

CHINESE regulators approved a plan by billionaire Jack Ma’s Ant Group Co to raise 10.5 billion yuan (RM6.83 billion) for its consumer unit, signalling progress in the government-ordered overhaul of the financial technology firm. 

The China Banking and Insurance Regulatory Commission (CBIRC) division in Chongqing green-lit the company’s plan to lift its capital to 18.5 billion yuan, according to a notice on Dec 30. Ant, which contributed 5.25 billion yuan as part of the plan, will control half of its shares after the deal, while a unit owned by the city of Hangzhou will hold 10%, becoming the second-biggest shareholder. 

The deal resolves a key hurdle for Ant as it seeks to meet requirements from regulators following a crackdown on its business after its record IPO was torpedoed in 2020. Chinese regulators have reined in shadow banking over the past years to reduce economic risk and Ant is still waiting to obtain a financial holding licence that will regulate it more like a bank. 

The greenlight is another sign that Beijing is softening its stance on its giant Internet sector, traditionally a big driver of growth, as the world’s No 2 economy sputters. Last week, authorities approved the most significant batch of new block-buster game releases in months, allowing Tencent Holdings Ltd to refill a pipeline emptied by the crackdown. 

Shares of Ma’s Alibaba Group Holding Ltd rose as much as 7.7% after the Ant news and the Hang Seng Tech Index extended its rally to 3.3%. Tencent jumped nearly 4% while Baidu Inc surged 6%. 

“We view it as a signal on Ant’s regulatory rectification wrap-up,” Leon Qi, an analyst with Daiwa Capital Markets Hong Kong Ltd, wrote in a report. The consumer unit will be able to handle 1.1 trillion yuan of loans once the fund-raising is complete, he said. 

The current plan is a scaled-down version of an earlier effort to boost capital to 30 billion yuan. Cinda Asset Management, one of China’s bad-debt managers, last year withdrew a plan to invest 6 billion yuan for a 20% stake in the consumer finance giant, without disclosing a reason. 

Ma has maintained a low profile since Ant’s IPO was halted. In a filing in July, Alibaba reiterated that Ma “intends to reduce and there-after limit his direct and indirect economic interest in Ant Group over time” to a percentage that doesn’t exceed 8.8%. — Bloomberg / pic AFP

• This article first appeared in The Malaysian Reserve weekly print edition