Alibaba Group Holding Ltd BABA-backed Ant Group has secured a key China Banking and Insurance Regulatory Commission approval to operate a consumer finance company, CNBC reported on Thursday.
What Happened: Ant will hold a 50% stake and contribute about $625.93 million to the new company, while a consortium of six shareholders will own the remaining stake, the report said.
The consumer finance arm will lend personal loans and issue bonds among other things. The unit will also house Ant’s revenue-driving credit businesses Huabei and Jiebei.
Why It Matters: The approval is being seen by some analysts as the first major step for Ant Group to resolve its regulatory issues after running into intense regulatory scrutiny.
Ant Group’s billionaire founder Jack Ma had last year publicly criticized China’s banking sector, comparing it as operating with that of a “pawnshop mentality." Shortly after, the company’s planned blockbuster Ant Group IPO plans were shelved.
The People’s Bank of China had ordered Ant Group in December to come up with a rectification plan including becoming a financial holding company, which could mean the company becomes regulated more like a bank.
Price Action: Alibaba shares closed 1.16% lower at $217.05 on Thursday.
Read Next: Is Alibaba's Stock About To Rally?
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