(Bloomberg) -- Chinese regulators approved a plan by billionaire Jack Ma’s Ant Group Co. to raise 10.5 billion yuan ($1.5 billion) for its consumer unit, signaling progress in the government-ordered overhaul of the financial technology firm.

Most Read from Bloomberg

The China Banking and Insurance Regulatory Commission division in Chongqing green-lit the company’s plan to lift its capital to 18.5 billion yuan, according to a notice on Dec. 30. Ant, which contributed 5.25 billion yuan as part of the plan, will control half of its shares after the deal, while a unit owned by the city of Hangzhou will hold 10%, becoming the second-biggest shareholder.

The deal resolves a key hurdle for Ant as it seeks to meet requirements from regulators following a crackdown on its business after its record initial public offering was torpedoed in 2020. Chinese regulators have reined in shadow banking over the past years to reduce economic risk and Ant is still waiting to obtain a financial holding license that will regulate it more like a bank.

The greenlight is another sign that Beijing is softening its stance on its giant internet sector, traditionally a big driver of growth, as the world’s No. 2 economy sputters. Last week, authorities approved the most significant batch of new blockbuster game releases in months, allowing Tencent Holdings Ltd. to refill a pipeline emptied by the crackdown.

Shares of Ma’s Alibaba Group Holding Ltd. rose as much as 7.7% after the Ant news and the Hang Seng Tech Index extended its rally to 3.3%. Tencent jumped nearly 4% while Baidu Inc. surged 6%.

Read more: Hong Kong Stocks Loving Approval for Ant Fundraising

“We view it as a signal on Ant’s regulatory rectification wrap-up,” Leon Qi, an analyst with Daiwa Capital Markets Hong Kong Ltd., wrote in a report. The consumer unit will be able to handle 1.1 trillion yuan of loans once the fundraising is complete, he said.