HONG KONG (AP) — Chinese regulators have said e-commerce giant Alibaba’s finance affiliate Ant Group can raise $1.5 billion for its consumer finance unit in a crucial step forward after the federal government called off a planned IPO two years ago and ordered the firm to restructure.
The China Banking and Insurance Regulatory Commission (CBIRC) within the southwestern city of Chongqing said in a notice dated Dec. 30 that Ant’s consumer credit unit had gained approval to extend its capital to 18.5 billion yuan ($2.7 billion) from 8 billion yuan ($1.16 billion).
The approval got here weeks after Beijing signaled at an economic work conference that it might support technology firms to spice up economic growth and create more jobs.
Under the newest capital expansion plan, Ant would contribute 9.25 billion yuan ($1.34 billion) for a 50% stake of its Chongqing consumer credit unit, while a separate company controlled by the federal government within the eastern city of Hangzhou, where Alibaba has its headquarters, would hold 10%.
The approval comes greater than a 12 months after an earlier plan to boost 22 billion yuan ($3.2 billion) fell through when China Cinda Asset Management — a state-owned bad loans manager — pulled out of an agreement to accumulate a 20% stake in Ant’s consumer finance arm.
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Ant is restructuring after Chinese regulators pulled the plug on its mega-IPO just days before its market debut in Hong Kong and Shanghai.
They then tightened regulations on the financial technology industry, ordering firms like Ant to operate more like banks and follow capital requirements.
This meant Ant had to wash up violations in a few of its businesses, comparable to credit, insurance and wealth management.
The corporate is awaiting approval of licenses to operate as a financial holding company and as a private credit rankings firm.
Alibaba shares in Hong Kong jumped over 7% on Wednesday. The corporate’s Latest York-listed shares have fallen greater than 23% prior to now 12 months.
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