Caixin
Nov 05, 2020 08:24 PM
FINANCE

Market Wonders Over Alibaba Selling Down Stake in Medical Checkup Specialist

Meinian is headquartered in Shanghai. Photo: Health 100
Meinian is headquartered in Shanghai. Photo: Health 100

A unit of e-commerce giant Alibaba Group Holding Ltd. has sold part of its shares in a medical checkup services provider, a deal that roused the market’s attention after the abrupt suspension of its affiliate Ant Group Co. Ltd.’s mega dual listing.

Shenzhen-listed health services operator Meinian Onehealth Healthcare Holdings Co. Ltd. announced Wednesday night that Alibaba (China) Network Technology Co. Ltd. had sold nearly 54 million Meinian shares — worth nearly 850 million yuan ($128 million) based on the average closing price on Monday and Tuesday, when the sales took place. The shares sold accounted for almost 1.4% of Meinian’s total, according to the company’s filing (link in Chinese) to the Shenzhen Stock Exchange.

The Alibaba unit’s move to cash out some of its shares roused market attention as China’s financial regulators are stepping up regulations for fintech firms such as Ant Group, including introducing new rules for financial holding companies earlier this month. On Monday, China published draft rules that would impose strict limits on Ant Group’s online lending operations that were likely hamper its expansion.

To comply with the rules for financial holding companies and draft regulations for online lending, Ant Group must be able to come up with enough capital reserves.

Ant Group’s previously planned record $34.5 billion IPO in Shanghai and Hong Kong was suspended Tuesday, reflecting the changes in the regulatory environment.

After Alibaba (China) Network sold some of the Meinian shares, the stake it held together with a subsidiary shrank to a combined 13% from the previous 14.4%, according to the filing.

Meinian has been widely considered a part of Alibaba’s ambitious plan to expand into the health care sector. In October 2019, Alibaba and private equity firm Yunfeng Capital Co. Ltd. purchased (link in Chinese) a 16.2% stake in Meinian.

Alibaba’s move to sell part of its holdings in Meinian has sparked discussions over how Alibaba and Ant Group would adhere to the new regulations.

The draft rules for online microlenders stipulate they should fund at least 30% of any joint loan with financial institutions. However, as of the end of June, Ant Group’s licensed nonbank financial subsidiaries — chiefly two online microlenders — contributed only 2% of more than 2.1 trillion yuan in credit balance enabled through its platform, according to its prospectus.

Sun Haibo, a financial regulation researcher, wrote (link in Chinese) that if Ant Group could currently provide about 1.8 trillion yuan of joint loans with only about 36 billion yuan of loans on its book, then it would need to have at least 540 billion on its balance sheet to meet the 30% requirement.

Also, with the draft rules limiting the amount of leverage an online microlender could take on, Ant Group would have to expand its capital for online microloans to 150 billion yuan from the current 35 billion yuan, Sun said.

 Read more 
Analysis: Stricter Regulations Challenge Ant Group and Fintech’s Rapid Rise

Contact reporter Timmy Shen (hongmingshen@caixin.com)

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