EXCLUSIVE China’s central bank accepts Ant’s application for financial holding company – sources

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

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  • PBOC, accepting a license to apply, may come soon – sources
  • Financial holding license to pave the way for Ant’s debut in the market
  • The PBOC mainly verifies the license for the source credit source joint venture

HONG KONG, June 17 (Reuters) – China’s central bank has accepted Ant Group’s bid to set up a financial holding company, three people familiar with the matter said. on the stock exchange.

The expected approval of the plan by the People’s Bank of China (PBOC) is the latest sign that Ant, a technology giant with a financial business ranging from payments to wealth management, is ready to step out of regulatory action.

PBOC accepted Ant’s statement this month, Reuters sources said, amid investor hopes that Chinese regulators are easing repression against private companies that began in late 2020 as the world’s second-largest economy slows due to the restriction of COVID-19.

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

Shares of New York-listed Alibaba Group Holding Ltd, China’s e-commerce giant, of which Ant is a subsidiary, rose 4% at the start of trading on Friday.

Although Ant has been working with financial regulators for months on a broad update, the central bank’s agreement to review the app signals that the company may receive its long-awaited license soon, sources said.

Chinese authorities abruptly halted Ant’s IPO, which was to raise $ 37 billion on the world’s largest list, in November 2020, shortly after technology billionaire founder Ma gave a speech accusing financial regulators of stifling innovation .

Suppressing Ma’s business empire, the authorities put Ant, whose business covers payment processing, consumer lending and the distribution of insurance products, under renewal.

As part of this overhaul, PBOC told Reuters in a December 2020 statement that Ant was drawing up a plan to set up a financial holding company and that Ant needed to ensure that all its financial operations were placed under regulatory oversight.

Ant was assessed as a technology company for its IPO, but the forced change of financial holding company will make it subject to capital requirements and regulations similar to those for banks.

CREDIT STATEMENT LICENSE

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

In order to submit a preliminary prospectus for the offering of shares next month at the earliest, Ant expects final feedback from financial regulators, especially PBOC, on the establishment of the financial holding company, a source said.

To officially revive its megalisting, Ant must secure a key license for a financial holding company and complete its restructuring, sources said.

The failed IPO marked the beginning of repression that hit Chinese technology giants and quickly spread to other sectors, including property and private education, wiping billions from market values ​​and causing layoffs in some companies.

However, Beijing has softened its position over the past few months. Deputy Prime Minister Liu He told technology executives last month that the government supports the development of the sector. Read more

In addition to the license for a financial holding company, the Ant joint venture for personal credit assessment has applied for a permit as part of the renewal of fintech major’s business.

The central bank has largely completed the review of the credit scoring license, another source with direct knowledge of the issue said after accepting the unit’s application in November. Read more

Ant has agreed to set up a joint venture with partners, including three state-owned companies, under a plan that allows state-backed investors to take a combined 48% stake in its key asset, a treasure trove of data from more than 1 billion users. Read more

Ant will own 35% of the company, and the only non-state shareholder, Transfar Group, will hold 7%, while Hangzhou Xishu will receive the remaining 10%, PBOC said in November.

Hangzhou Xishu is a legal entity that manages employee ownership plans, another source told Reuters.

But regulators have recently proposed further changes to the shareholder structure to increase the share of state investors, with approval of the license expected after the adjustment is made, a fourth source said.

Ant, through the superpay app Alipay, collects data from more than 1 billion users, many of them young, understanding online people without credit cards or enough bank credit records, and 80 million merchants, according to analysts and its IPO prospectus.

Shares in the US of Chinese companies Pinduoduo (PDD.O), Bilibili (9626.HK), Baidu (9888.HK), NIO, JD.COM (9618.HK) and Tencent Music (TME.N) rose between 1, 6% and 6.2% on Friday.

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Report by Julie Ju and Xie Yu; Edited by Sumeet Chatterjee and William Mallard

Our standards: Thomson Reuters’ principles of trust.

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