An Ant Group logo is displayed at the headquarters of Ant Group, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China, on October 29, 2020. REUTERS / Aly Song
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- The PBOC that takes the license of application signals can arrive soon: sources
- License of financial possession to pave the way for the debut in the market Ant
- The PBOC has primarily issued a verification license for credit score source JVs
HONG KONG, June 17 (Reuters) – China’s central bank has accepted Ant Group’s request to set up a financial holding company, said three people with knowledge of the matter, a key step to end a one-year renewal of Jack Ma’s fintech business and regaining his stock market debut.
The expected approval of the People’s Bank of China (PBOC) plan is the latest sign that Ant, a tech giant with financial business that extends from payments to wealth management, is about to ‘a regulatory crackdown.
The PBOC accepted Ant’s request this month, sources told Reuters, amid investor hopes that Chinese regulators are easing the crackdown on private companies that began in late 2020, as growth is slowing in the world’s second largest economy due to COVID-19 brakes.
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Ant and the PBOC did not respond to requests for comment from Reuters on Friday.
New York-listed shares of Alibaba Group Holding Ltd, the Chinese e-commerce giant of which Ant is a subsidiary, rose 4% in early trading on Friday.
Although Ant has been working with financial regulators for months on a broad renewal, the central bank’s acceptance of reviewing the application indicates that the company could get its long-awaited license soon, sources said. request not to be named due to confidentiality limitations.
Chinese authorities suddenly disconnected Ant’s IPO, which is expected to raise $ 37 billion from the world’s largest listed company, in November 2020, shortly after the founder of technology billionaire Ma delivered a speech accusing the agencies of financial control of drowning innovation.
Repressing Ma’s business empire, the authorities put Ant, whose business covers payment processing, consumer loans for the distribution of insurance products, under renewal.
As part of this review, the PBOC in December 2020 told Reuters in a statement that Ant was drafting a plan to establish a portfolio financial firm and that Ant should ensure that all its financial operations are put under regulatory supervision.
Ant had been valued as a technology company for its IPO, but the forced change to a financial holding company would subject it to capital requirements and regulations similar to those of banks.
CREDIT SCORE LICENSE
Reuters reported last week that China’s central leadership had given the green light to Ant to reactivate its IPO in Shanghai and Hong Kong. Read more
With the aim of presenting a preliminary prospectus for the offer of shares as early as next month, Ant is awaiting the final feedback from financial regulators, especially the PBOC, on the creation of the financial holding company. said a source.
To formally reactivate its mega-list, Ant must secure the key financial participation license and complete its restructuring, sources said.
The collapse of the stock market marked the beginning of the crackdown on China’s technology giants and quickly spread to other sectors, such as property and private education, removing billions from market values and causing 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
Aside from the license of the financial holding company, Ant’s joint personal credit score company has applied for a permit, as part of the big fintech business renewal.
The central bank has mostly finished reviewing the credit score license, said another source with direct knowledge of the matter, after accepting the unit’s application in November. Read more
Ant has agreed to establish the JV with partners that include three state-owned companies under a plan that allows state-backed investors to take a combined 48% stake in its key asset: a data treasury of more than a billion of users. Read more
Ant will own 35% of the company and the only non-state-backed shareholder, Transfar Group, will own 7%, while Hangzhou Xishu will get the remaining 10%, the PBOC said in November.
Hangzhou Xishu is an entity that manages employee share ownership plans, another source told Reuters.
But regulators have recently suggested further tweaking the shareholding structure to increase state investor holdings, and approval of the license is expected after the adjustment is made, the fourth source said.
Ant, through the Alipay superapplication, collects data from more than 1 billion users, many of whom are young people and Internet savvy with no credit cards or sufficient bank credit records, as well as 80 million merchants, according to analysts and their IPO.
Shares of Chinese companies Pinduoduo (PDD.O), Bilibili (9626.HK), Baidu (9888.HK), NIO, JD.COM (9618.HK) and Tencent Music (TME.N) listed in the United States up between 1.6% and 6.2% on Friday.
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Report by Julie Zhu and Xie Yu; Edited by Sumeet Chatterjee and William Mallard
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