Tencent Steps up Registered Capital of Online Micro-loan Vehicle Following Suspension of Ant Group IPO

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Chinese fintech giant Tencent is taking advanced measures to deal with the tighter regulation of China’s online micro-loan sector that analysts believe to be behind the shelving of the much-anticipated Ant Group IPO.

Data from Tianyancha (天眼查) indicates that Tencent subsidiary Shenzhenshi Caifutong Wangluo Jinrong Xiao’e Daikuan Co., Ltd. (Shenzhen Caifutong Internet Finance Micro-loan Co., Ltd.) (深圳市财付通网络金融小额贷款有限公司) changed its company registration on 4 November, raising its registered capital from 1 billion yuan to 2.5 billion yuan (approx. USD$378 million).

The subsidiary’s actually paid-up capital remained unchanged at 300 million yuan.

The shift comes following signals from Beijing that regulators will tighten their regulation of online micro-finance operations, in the wake of the collapse of the Chinese P2P lending sector due to widespread fraud issues.

China issued the draft version of strict new regulations governing online micro-loan operations on 2 November, in a move that many analysts believe to be the decisive factor behind the suspension of the USD$36 billion IPO of fintech giant Ant Group on the Shanghai and Hong Kong bourses.

“The Measures are directed at controlling leverage, controlling business scopes, and firming up regulation,” said Xu Bei (徐北), deputy-secretary of the Guangdong Micro-Loan Association, to Diyi Caijing.

Xu forecasts that the implementation of the Measures will prompt at least half of the more than 240 online micro-loan companies operating in China to change their operations or even withdraw from the market.

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