Jack Ma’s Ant Group retreated to government-led restructuring efforts after a state-owned asset management company unexpectedly withdrew from a contract to invest in FinTech’s lending sector.
China Cinda Asset Management, managed by the Ministry of Finance of the State, Set to invest RMB 6 billion ($ 946 million) in exchange for 20% of Ant’s loan business said it would withdraw from the deal late Thursday after “careful commercial consideration and negotiations with the target company.”
Ant managed by billionaire tech entrepreneur Ma Business restructuring Chinese regulators unplugged the blockbuster $ 37 billion initial public offering a few days before their debut in November 2020.
Ma is mainly Disappeared from public view Ant and his e-commerce group Alibaba are under severe government pressure. Financial authorities have focused on shrinking Ant’s business and limiting financial risk as part of a “correction” campaign for fintech companies, China’s largest consumer credit issuer.
The amendment plan includes the dissolution of Ant’s largest self-managed fund. Force spin-off Two of its most valuable businesses have become new companies that have accepted state-owned shareholders.
Ant’s lending business 39% of revenue In the first half of 2020, it was transferred to Chongqing Ali Consumer Finance and holds a 50% stake.this is Huge amount of user data Ant supports a new credit scoring company founded by state-owned shareholders with a 35% stake.
Cinda’s planned investment was part of funding for Chongqing Ant to strengthen its funding and continue to lend to millions of users with Ant’s Alipay app.
Analysts at Fitch Ratings predicted that the expansion of the capital base would allow Ant to support most of its online lending activities within the scope of new government rules to curb financial risk.
Chongqing Ali said he would work to attract new investors to “fully respect the business decisions” made by Cinda and “to ensure that corrective work on the consumer finance business is carried out effectively.”
Other minority shareholders of the venture include Cinda’s subsidiary Nanyang Commercial Bank, battery maker Contemporary Amperex Technology, state-owned distressed bond investor China Huarong Asset Management, and Jiangsu Yuetsu Medical Equipment & Supply. It will be.
Jiangsu Yuyue said he has also postponed plans to increase investment in Chongqing Ali.
Don Simiao, chief analyst at the Institute for Monetary and Internet Finance in Zhongguancun, said it would not be easy for Ant to find an alternative investor to Cinda.
“Not many companies have RMB 6 billion in cash on hand .. .. Having cash is not enough and investors are very well qualified to hold shares in these financial institutions. . “
Chinese regulators continue to scrutinize Ant and its superappli, Alipay. Ant has also abolished the experimental investment tools it recently started offering to its users this week.
China’s business news website Caixin said the feature was forced offline due to regulatory breaches. Ant said a third-party fund advisor “provided the tool as part of the trial period.” [been] Has completed”.
Ant continues to shrink Flagship Money Market Fund Tianhong Yu’e Bao to comply with the government’s corrective plan. After its launch in 2013, the fund quickly became the world’s largest money market fund by leveraging the remaining cash stored by users in Alipay’s payments app.
However, at the end of the third quarter, Yu’e Bao’s assets under management fell to RMB765 billion. This is about half of the 2018 peak.
Additional report by Nian Liu of Beijing
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