(Reuters) – China Cinda Asset Management Co Ltd scrapped a deal to buy a 20% stake worth about $944 million in fintech giant Ant Group’s consumer finance arm because of pressure from state authorities, people with knowledge of the matter said.

Cinda, one of the four biggest state-owned asset management companies (AMCs) in China, announced the scrapping of the planned Ant investment on Thursday, without elaborating on the reason.

The decision could further delay a regulatory-driven revamp of Ant, an affiliate of Alibaba, and the revival of its public market debut after its $37 billion dual-listing attempt was derailed at the last minute in November 2020.

Cinda’s crucial capital injection into Ant was endorsed by its primary regulator – the China Banking and Insurance Regulatory Commission (CBIRC) – but it failed to secure approval from higher government authorities, said two sources with direct knowledge of the matter.

One of the sources said China’s State Council, its cabinet, was one of the authorities that questioned Cinda’s bid to invest in Ant while the fintech firm’s core business was still in the middle of restructuring, and finally rejected it.

The rejection was also triggered by concern that the deal could run counter to state AMC’s direction of reform that requires asset managers to focus on their core business of disposal of soured loans, and the divesting of non-core assets, the second source said.

Cinda on Monday declined to elaborate beyond its Thursday statement announcing the pullback, in which it said the decision came after prudent commercial consideration and negotiation with Ant’s consumer finance unit.

Ant did not respond to a Reuters request for comment.

Last week, the company said it respected the “business decision” of Cinda and that it would “ensure the rectification work” for the consumer finance unit was carried out.

The CBIRC and the State Council Information Office did not immediately respond to requests for comment.

The sources declined to be identified because of the sensitivity of the matter.

Cinda, which was established in Beijing in the late 1990s to handle soured debts at state banks, counts the Ministry of Finance as its biggest shareholder.

The withdrawn investment plan would have increased Cinda’s interest in Chongqing Ant Consumer Finance Co Ltd to 24% and would have made the asset manager its second-biggest investor.

Ant’s consumer finance unit had planned to boost its registered capital to 30 billion yuan ($4.73 billion) from 8 billion yuan, with 6 billion yuan coming from Cinda, and bring in new strategic investors.

Even after the planned capital raising, Ant would have retained a 50% stake in the unit, according to Cinda’s filing to the Hong Kong Stock Exchange late last month.

Two other investors in the Ant unit – Jiangsu Yuyue Medical Equipment & Supply Co Ltd and Sunny Optical Technology Group Co Ltd – that had previously agreed to the capital increase said on Friday that they would postpone their investments in light of Cinda’s move.

($1 = 6.3472 Chinese yuan renminbi)

(Reporting by Julie Zhu and Cheng Leng; Editing by Sumeet Chatterjee, Robert Birsel)