China's Ant Group Receives Approval for Capital Increase Plan... Stock Price Surges

[Photo by AFP Yonhap News]

[Asia Economy Reporter Kim Min-young] Alibaba's fintech affiliate Ant Group recently saw its stock price surge after receiving approval from authorities for its capital raising plan.

According to the website of the Chongqing Supervision Bureau of the China Banking and Insurance Regulatory Commission (CBIRC) on the 4th, the authorities recently approved the registered capital increase and equity structure adjustment plan submitted by Ant Group's affiliate, Ant Consumer Finance.

As a result, Ant Consumer Finance can increase its registered capital by 10.5 billion yuan (approximately 1.94 trillion KRW) to 18.5 billion yuan (approximately 3.41 trillion KRW).

The authorities allowed certain companies to purchase shares in Ant Consumer Finance and designated the investment amounts and ratios for the investing companies.

Accordingly, Jintou (金投) Digital Technology Group, owned by the Hangzhou municipal government, became the second-largest shareholder with a 10% stake, following Ant Group's 50%.

The authorities mandated that the related procedures be completed within six months.

Bloomberg News evaluated this move as showing progress in the Chinese government's directive to restructure Ant Group, while also signaling a regulatory easing toward big tech companies.

After Alibaba and Ant Group founder Jack Ma criticized financial regulations at a public event in October 2020, the Chinese government halted Ant Group's planned $35 billion (approximately 44.5 trillion KRW) initial public offering (IPO) scheduled for November of that year.

Bloomberg reported that the authorities have not yet issued a financial holding company license to Ant Group. If Ant Group transitions to a financial holding company, it will be subject to regulations similar to those for banks, which is essential for its future IPO.

The Chinese authorities' decision was disclosed on the related website on the 30th of last month, and Alibaba's stock price, listed in Hong Kong, rose 2.78% on the first trading day of the new year, the 3rd, followed by a 7.75% increase on this day.