Chinese Authorities Approve Ant Group's Consumer Finance Business... New Corporation's Capital at 1.4 Trillion KRW
Chinese Experts Say "It's Still Early to Mention Ant Group IPO"
[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese authorities have approved the consumer finance business of Ant Group, the financial subsidiary of Alibaba Group.
According to Chinese economic media Caixin on the 4th, the Chongqing Banking and Insurance Regulatory Commission approved the establishment of Ant Group's subsidiary, 'Chongqing Ant Consumer Finance Co., Ltd.', the day before.
Ant Group holds a 50% stake in the newly established company, with major shareholders including Nanyang Commercial Bank (Hong Kong-based), Kuo Tai Hsieh Hua Bank (Taiwan-based), Huarong Asset Management, CATL, Chenfang Technology, and Youyue Medical. The capital of this new company is 8 billion yuan (approximately 1.4 trillion KRW).
Ant Group's other small credit loan subsidiaries, 'Jebei' and 'Huabei', will be integrated into the new company within six months. Afterwards, Jebei and Huabei will be converted into fintech-exclusive consumer loan products.
Caixin reported that the new company will be strictly regulated according to the notice on additional regulations for internet loan businesses of Chinese commercial banks, including capital adequacy ratio, loan limits, debt management, and interest rates.
A Chinese regulatory official stated, "The new company must strictly manage consumers' loan purposes and repayment abilities," adding, "These measures are intended to protect consumers."
Although consumer finance business approval has been granted to Ant Group, there are forecasts that Ant Group's initial public offering (IPO) will not proceed for the time being.
The state-run Global Times, citing experts, reported that the newly approved Ant Group consumer finance subsidiary has corrected the previously excessive leverage issues, and that it will take a considerable amount of time (1 to 5 years) before Ant Group can relist.
Professor Wang Peng of Renmin University of China said, "Ant Group operates various businesses," and added, "There are many areas that need to be revised according to government guidelines beyond the approved business sector this time."
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