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HONG KONG (Reuters) – Ant Group, Alibaba BABA.N The fintech arm and China’s leading mobile payments company, plans to set up a consumer finance company in the country’s southwestern city of Chongqing, expanding its presence in the growing domestic sector, said two sources at Reuters.

FILE PHOTO: The logo of Ant Financial Services Group, the financial subsidiary of Alibaba, is pictured at its headquarters in Hangzhou, Zhejiang province, China January 24, 2018. REUTERS/Shu Zhang

The move underscores a broader push by Ant and other Chinese tech majors, including Tencent. 0700.HK and Bytedance, to strengthen in financial services closer to home as they battle increasing scrutiny of their overseas tech businesses and a deepening Sino-U.S. standoff.

Ant, 33% owned by e-commerce giant Alibaba Group Holding, has already racked up a range of financial licenses here, including payments, online banking, insurance and micro-loans to operate in the vast financial market. Chinese valued at trillions of dollars.

Ant plans to partner with Nanyang Commercial Bank and Alibaba-backed intelligent transportation services company China TransInfo Technology 002373.SZ for the consumer credit industry, said the sources, who have direct knowledge of the matter but declined to be named because the information was private.

Ant will own about 50% of the capital, while Nanyang Commercial and TransInfo will own 15% and 10% respectively of the new company. Other co-founders include Contemporary battery manufacturer Amperex Technology Co Ltd (CATL) 300750.SZthey added.

The founders plan to invest a total of about 8 billion yuan ($1.2 billion) in the company as registered capital and plan to sign the deal as early as Friday, the sources added.

Ant and CATL declined to comment.

Nanyang Commercial Bank and TransInfo did not immediately respond to requests for comment.

Ant said last month it had started the process of dual listing in Hong Kong and Shanghai. The group plans to raise more than $20 billion in total through the dual listing, separate sources told Reuters.

Booming demand

The consumer finance company, which could start operating in the fourth quarter of the year, aims to become one of the biggest consumer finance players in China, one of the sources said.

While Ant already runs two micro-credit companies in Chongqing, the new company would be a big boost as a consumer finance company’s lending scale can reach 10 times its registered capital. The leverage ratio of an online micro-loan company is only two to three times that amount.

Internet consumer finance in China, a loosely regulated industry, grew 400-fold to nearly 8 trillion yuan in the four years to 2018, according to the Guanghua School of Management.

A pandemic-hit economy has dampened demand for consumer credit, but authorities have identified consumer lenders as a key lever to revive consumption.

Reporting by Julie Zhu; Additional reporting by Keith Zhai in Singapore; Editing by Sumeet Chatterjee and Himani Sarkar