By Senad Karaahmetovic
Shares of Alibaba (NYSE:BABA) are up about 7% in pre-market after its Ant Group received a green light from Chinese regulators to raise $1.5 billion for its consumer unit. Alibaba owns a roughly 33% stake in Ant Group.
According to a notice on December 30 issued by the China Banking and Insurance Regulatory Commission (CBIRC), Ant can increase its capital to CNY 18.5B ($2.7B).
Ant contributed CNY 5.25B and will control half of its shares after the deal. Another entity, controlled by the city of Hangzhou, will become the second biggest shareholder with a 10% stake. Sunny Optical Technology Group Co. and Jiangsu Yuyue Medical Equipment & Supply Co. are mentioned by Bloomberg as other new investors.
The approval signals the improving relationship between China’s e-commerce behemoth and regulators. Ant is now expected to make continued progress as it looks to recover from the failed initial public offering (IPO) in 2020.
“We view it as a signal on Ant’s regulatory rectification wrap-up,” said Leon Qi, an analyst with Daiwa Capital Markets Hong Kong, according to Bloomberg.