Caixin
Aug 25, 2020 08:00 PM
FINANCE

New Consumer Lending Arm Gives Ant Group License to Lend a Lot More

Ant Group will hold 50% of the new company, Ant Consumer Finance, which will have a registered capital of 8 billion yuan.
Ant Group will hold 50% of the new company, Ant Consumer Finance, which will have a registered capital of 8 billion yuan.

Ant Group Co. Ltd., a fintech affiliate of e-commerce giant Alibaba Group Holding Ltd., has planned to set up a consumer finance company in the southwestern city of Chongqing, aiming to accelerate the growth of its online lending business ahead of a widely expected blockbuster IPO.

Ant Group is just one of many companies in the online lending business eyeing consumer finance licenses to take advantage of rules that allow such firms to lend out a lot more than a typical microlender, significantly boosting the total lending capacity of Ant Group’s stable of fintech firms. That stable includes the well-known Huabei and Jiebei online microlending services, both also based in Chongqing.

Ant Group will hold 50% of the new company, called Chongqing Ant Consumer Finance Co. Ltd., according to a Friday filing (link in Chinese) with the Shenzhen Stock Exchange by medical device company Jiangsu Yuyue Medical Equipment & Supply Co. Ltd., a minority shareholder. The new company will have a registered capital of 8 billion yuan ($1.2 billion).

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Nanyang Commercial Bank Ltd., a subsidiary of state-owned distressed-debt manager China Cinda Asset Management Co. Ltd., will hold a 15.01% stake in the new firm, becoming the second-largest shareholder, the filing showed. Other shareholders include Taiwanese commercial bank Cathay United Bank (China) Ltd. and electric vehicle battery-maker Contemporary Amperex Technology Co. Ltd., which will hold stakes of 10% and 8%, respectively.

The plan to set up the new firm is pending regulatory approval, according to the filing. Ant Group declined to comment on matters related to the firm.

The tie-ups would help Ant Consumer Finance deal with bad loans and attract new borrowers from the shareholders’ industries, such as batteries and medical devices, said Chen Wen, director of Southwestern University of Finance and Economics’ digital economy research center.

The new company’s consumer lending license is worth noting, as a consumer finance company is generally allowed to borrow more than a typical microloan company, and thus lend out more.

Currently, China’s banking regulator has approved licenses for more than two dozen consumer finance firms, including Chongqing Xiaomi Consumer Finance Co. Ltd., Citic Consumer Finance Co. Ltd. and Ping An Consumer Finance Co. Ltd. Of the lot, Home Credit Consumer Finance Co. Ltd. has the largest registered capital.

Last month, Ant Group, which is 33% owned by Alibaba, began the process to do concurrent IPOs in Hong Kong and Shanghai. Rooted in Alipay, the payment platform that Alibaba set up in 2004, Ant Group has grown into an elephant-sized juggernaut that owns the world’s largest payment service and runs the biggest money-market fund, Yu’e Bao.

The fintech startup was looking to raised $30 billion in its upcoming offering, sources with knowledge of the matter told Caixin. If the plan goes ahead, the offering would become the world’s largest IPO, surpassing Saudi Arabian oil giant Saudi Aramco’s $29.4 billion IPO about half a year ago.

Han Wei contributed to this report.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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