EXCLUSIVELY China’s central bank accepts Ant’s application as a financial holding company – sources

An Ant Group logo is pictured at the headquarters of Ant Group, an Alibaba subsidiary, in Hangzhou, Zhejiang province, China, 29 October 2020. REUTERS / Aly Song

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  • PBOC licensing for application signals may arrive soon – sources
  • Financial license to pave the way for Ant’s market debut
  • PBOC mostly did the verification license for the credit scoring JV – source

HONG KONG, Jun 17 (Reuters) – China’s central bank has accepted Ant Group’s request to set up a financial holding company, three experts in the field said, a key step in completing a year-long renewal of the company’s fintech business. Jack Ma and relaunching his stock market debut.

The expected approval of the plan by the People’s Bank of China (PBOC) is the latest sign that Ant, a tech giant with financial assets ranging from payments to wealth management, is ready to emerge from regulatory crackdown.

The PBOC this month accepted Ant’s question, sources told Reuters, amid investor hopes that Chinese regulators are easing the crackdown on private businesses that began in late 2020 as growth slows in the second-largest economy. largest in the world due to the COVID-19 curbs.

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

The New York-listed shares of Alibaba Group Holding Ltd, the Chinese e-commerce giant Ant is affiliated with, were up 4% in early trading on Friday.

Although Ant has been working with financial regulators for months on an extensive revamp, the central bank’s acceptance to review the application signals that the company could get the long-awaited license soon, the sources said, who asked. not to be appointed due to confidentiality restrictions.

Chinese authorities abruptly pulled the plug on Ant’s IPO, set to raise $ 37 billion in the world’s largest listing, in November 2020, just after tech billionaire founder Ma gave a speech accusing watchdogs. financials to stifle innovation.

By cracking down on Ma’s business empire, authorities have put Ant, whose businesses range from payment processing, to consumer lending to distribution of insurance products, under renovation.

As part of that review, the PBOC in December 2020 told Reuters in a statement that Ant was drafting a plan to create a financial holding company and that Ant should have ensured that all of its financial operations were placed under regulatory oversight.

Ant was rated as a tech company for its IPO, but a forced switch to a financial holding will make it subject to capital requirements and regulations similar to those for banks.

CREDIT SCORE LICENSE

Reuters reported last week that China’s central leadership had given Ant a timid green light to re-launch its IPO in Shanghai and Hong Kong. Read more

Aiming to present a preliminary prospectus for the share offering as early as next month, Ant is awaiting final feedback from financial regulators, particularly the PBOC, on the establishment of the financial holding, a source said.

To formally relaunch its mega-listing, Ant must secure the key financial holding license and complete its restructuring, the sources said.

The sunken IPO marked the beginning of a crackdown on Chinese tech giants and was quickly rolled out to other sectors, including private property and education, wiping out billions of market values ​​and causing layoffs in some companies. .

Beijing, however, has softened its stance in recent months. Vice Premier Liu He told technology executives last month that the government has supported the development of the industry. Read more

Aside from the financial holding company’s license, Ant’s personal credit score joint venture has applied for a permit, as part of the major fintech’s corporate renewal.

The central bank has largely finished examining the credit scoring license, another source with direct knowledge of the matter said, after accepting the application for the unit in November. Read more

Ant agreed to form the JV with partners including three state-owned companies as part of a plan that allows state-backed investors to acquire a combined 48% stake in its key asset – a data treasury of more than 1 billion users . Read more

Ant will own 35% of the firm and the sole 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 runs employee stock ownership plans, another source told Reuters.

But recently, regulators have suggested further changes to the shareholding structure to increase the holdings of state investors, with license approval expected after the adjustment, the fourth source said.

Ant, via the Alipay super-app, collects data from more than 1 billion users, many of whom are young Internet savvy with no credit cards or sufficient bank credit records, as well as 80 million merchants, according to analysts and its prospectus. IPO.

U.S.-listed shares of Chinese companies Pinduoduo (PDD.O), Bilibili (9626.HK), Baidu (9888.HK), NIO, JD.COM (9618.HK) and Tencent Music (TME.N) have risen between 1.6% and 6.2% on Fridays.

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Reporting by Julie Zhu and Xie Yu; Edited by Sumeet Chatterjee and William Mallard

Our Standards: Thomson Reuters Trust Principles.

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