finance news

Ant Group gains China’s approval to operate consumer finance company

Ant Group gains China’s approval to operate consumer finance company
Ant Group gains China’s approval to operate consumer finance company

Ant Group, an affiliate company of Alibaba Group, has reportedly obtained China’s approval to operate a consumer finance company, a significant step in the forced restructuring of its business. The approval came just months after the regulators slammed the brakes on the company’s record-breaking listing.

According to the China Banking & Insurance Regulatory Commission, the affiliate company will maintain a 50% stake in the new entity as well as contribute over $625.93 million (4 billion Chinese yuan) in registered capital. In addition, another 6 shareholders will contribute the same amount and hold the remaining stake in the entity. It will also be registered in Chongqing’s southwestern city with a total registered capital worth 8 billion yuan.

The new business will be able to give out issue bonds and personal loans, among other offerings. Additionally, the consumer finance company will house the credit businesses of Ant, i.e. Jiebei and Huabei.

In November 2020, Ant Group planned to carry out a record-breaking $34.5 billion IPO in Hong Kong and Shanghai. The Chinese authorities, however, blocked the listing just two days before going public, citing regulatory concerns. Later in December, the People’s Bank of China ordered the company to focus on a rectification plan and approved a series of undertakings in April 2021.

A spokesperson for Ant Group has reportedly cited that the company will collaborate with Chongqing Ant Consumer Finance Co., Ltd.’s shareholders under the guidance of its regulators, with an aim to cater to the needs of consumers and continuously enhance its risk management capabilities and financial services.

Prior to the suspension of Ant Group’s IPO, Chinese regulators revealed concerns about the delivery of bank-like services by the technology companies and its potential impact on financial stability. As per reliable reports, any loans delivered through the Jiebei and Huabei brands must be partly underwritten by the consumer finance company of Ant.

Source credit:

https://www.cnbc.com/2021/06/03/china-approves-jack-mas-ant-group-to-operate-consumer-finance-firm.html

About the author

Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for newsorigins.com, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.