ONLY China Central Bank Approves Ant’s Financial Company Application – Sources

The Ant Group logo is displayed at the headquarters of Ant Group, an affiliate of Alibaba, in Hangzhou, Zhejiang Province, China, on October 29, 2020. REUTERS / Aly Song

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  • PBOC application licensing signals may come soon – sources
  • Ant-licensed financial holding company to pave the way for its market debut
  • The PBOC has mostly licensed a credit score JV exam – source

HONG KONG, June 17 (Reuters) – China’s central bank approves Ant Group’s bid to set up a financial company .

The approval of the plan by the People’s Bank of China (PBOC) is the latest sign that Ant, a huge technology with financial businesses that go from payments to wealth management, is ready to come out of a regulatory crackdown.

This month, the PBOC approved Ant’s request, sources told Reuters that investors are hoping the Chinese regulators are easing the crackdown on private companies launched in late 2020 as growth slows growth in the world’s second largest economy due to COVID-19 cuts.

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Ant and PBOC did not respond to requests from Reuters for comment on Friday.

Shares of Alibaba Group Holding Ltd, a New York-based Chinese e-commerce giant Ant-affiliated, rose 4% in early trading on Friday.

Working with Ant for months of extensive innovation with financial regulators, the central bank’s agreement to review the application means the company could get a long-awaited license, sources said, and asked for the appointment due to confidentiality restrictions.

Chinese authorities abruptly removed Ant’s IPO in November 2020 to raise $ 37 billion on the world’s largest list shortly after a speech by a billionaire technology maker accusing financial caretakers of stifling innovation.

In the face of Ma’s business empire, authorities overhauled Ant, whose business includes payment processing and consumer loans for the distribution of insurance products.

As part of that review, the PBOC told Reuters in a December 2020 note that it was preparing a plan to set up a financial company Ant and that Ant should ensure that all its financial operations were placed under regulatory oversight.

Ant was valued as a technology company for its IPO, but forced the change of a financial company to impose capital requirements and regulations on banks.

CREDIT SCORE LICENSE

Reuters reported last week that China’s central chief had given Ant a temporary green light to revive his IPO in Shanghai and Hong Kong. Read more

With a view to presenting a preliminary stock offer for next month, Ant is awaiting the final opinions of financial regulators, especially the PBOC, on the creation of the financial company, a source said.

To formally revive its mega-list, Ant needs to secure a key financial holding license and complete its restructuring, sources said.

The devastating IPO marked the beginning of a crackdown on China’s technology giants and spread rapidly to other sectors, including private property and education, wiping out billions in market values ​​and leading to the layoffs of some companies.

Beijing, however, has softened its stance in recent months. Deputy Prime Minister Liu He told technology executives last month that the government supported the development of the sector. Read more

In addition to Fintech’s license, Ant’s joint venture with a personal credit score has applied for permission as part of a major fintech business overhaul.

Another source with direct knowledge of the subject has said that the central bank has mostly finished examining the credit score license after approving the application for the unit in November. Read more

Ant has agreed to implement a JV with partners that include three state-owned companies, according to a plan that allows state-backed investors to take a combined 48% stake in its core assets – a data treasure trove of more than 1 billion users. Read more

Ant will own 35% of the company, while the sole shareholder in the state-owned shareholder, Transfar Group, will have 7%, while Hangzhou Xishu will have the remaining 10%, the PBOC said in November.

Hangzhou Xishu is an entity that manages employee share plans, another source told Reuters.

But recently, regulators have suggested further changes to the shareholding structure to increase state investor participation, as the license is expected to be approved after the adjustment, the fourth source said.

Ant, through its Alipay super-app, collects data from more than 1 billion users, many of whom are young people on the Internet who don’t have enough credit cards or bank credit, as well as 80 million retailers, according to analysts and its IPO brochure.

Shares of Chinese companies Pinduoduo (PDD.O), Bilibili (9626.HK), Baidu (9888.HK), NIO, JD.COM (9618.HK) and Tencent Music (TME.N) rose by 1.6. % and 6.2% on Friday.

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A report by Julie Zhu and Xie Yu; Edited by Sumeet Chatterjee and William Mallard

Our standards: Thomson Reuters Trust principles.

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