Jack Ma’s Ant Group gets regulatory nod for $1.5 billion capital raising plan

Chinese billionaire Jack Ma’s Ant Group won regulatory approval to increase the registered capital of its consumer finance unit by 10.5 billion yuan ($1.5 billion), a move that suggests progress in the fintech giant’s efforts to restructure its business to satisfy the authorities’ requirements.

Chongqing Ant Consumer Finance, which was established in 2021 to host Ant’s consumer loan businesses, such as Huabei and Yibei, got the green light to raise capital to about $2.7 billion on Dec. 29, according to a post published by the Chongqing unit of the China Banking and Insurance Regulatory Commission. This will allow Ant to handle more consumer-oriented loans, and it eliminates another regulatory hurdle to completing an initial public offering that was abruptly shelved in 2020. Ant was told at the time that it needed to revamp its various business areas, including boosting its capital adequacy to keep the risk in check.

Now, under the approved plan, Ant Group would contribute $1.3 billion and own half of the Chongqing unit upon completion of the deal. An entity owned by the Hangzhou municipal government would become the second largest shareholder with a 10% stake, having contributed US$270 million.

Other investors participating in the fundraising round include billionaire Wu Guangming’s Shanghai-based medical device company Jiangsu Yuwell, billionaire Robin Zeng’s battery giant Contemporary Amperex Technology and state-run China Huarong Asset Management, according to government filings.

However, the capital increase marks a scaled-down version of an earlier plan, which would have seen Ant raise $3.5 billion for the Chongqing unit, with more than a quarter of the funding coming from state-owned China Cinda Asset Management. Cinda later walked away from the deal, citing “further sound commercial assessment and negotiations.”

Ant Group, meanwhile, has yet to be granted licenses to become a financial holding company, which would see it regulated more like a bank. Ma, who was ranked No. 5 on the list of China’s 100 richest people in November with a net worth of $20.6 billion, is also expected to gradually relinquish control of the fintech giant he co-founded nearly 20 years ago . The former high-flying tycoon no longer has an executive role in the company and does not sit on the board either.