Jack Ma’s Ant Group wins approval for $1.5 billion capital plan

The China Banking and Insurance Regulatory Commission division in Chongqing green-lit the company’s plan to lift its capital to 18.5 billion yuan, according to a notice on December 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 initial public offering was torpedoed in 2020. Chinese regulators have reined in shadow banking over the past years to reduce economic risk and Ant is still waiting on obtaining a financial holding license that will regulate it more like a bank.

“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 fundraising is complete, he said.

Other new investors include Sunny Optical Technology Group Co. and Jiangsu Yuyue Medical Equipment & Supply Co.

The consumer finance unit combines Ant’s most lucrative online lending operations, Huabei and Jiebei.

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The current plan is a scaled back version of another 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, affiliate Alibaba Group Holding Ltd. reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that doesn’t exceed 8.8%.