Jack Ma’s Ant grows consumer-finance unit with $3.5 billion fundraising

The share sale will nearly quadruple the registered capital of the recently established entity, Chongqing Ant Consumer Finance Co., to 30 billion yuan, equivalent to $4.7 billion. This will allow the entity to maintain a larger balance sheet, meaning it can pass more credit to customers, and marks a step forward in a significant part of Ant’s improvement.

Ant, a financial-technology company controlled by billionaire Jack Ma, was forced to overhaul its business in November 2020 after Chinese authorities canceled its initial public offering.

One of the areas that attracted Beijing’s wrath was Ant’s vast consumer-lending operation, in which it generated loans for external lenders, who took on most of the credit risk.

Unit funding represents a transition to a different business model with a more diverse range of options. The unit was approved by regulators earlier this year and was registered in the southwestern Chinese municipality of Chongqing. It has two Ant credit services, Huabei and Jibei, which are used by about half a billion people in China.

China Sinda Asset Management Co., a large state-owned company listed in Hong Kong, said on Friday it would invest 6 billion yuan, the equivalent of $942 million, for a 20% stake in the business as part of a larger capital raise.

Cinda said its partnership will enable it to “establish closer collaboration with leading consumer financial services providers in the industry.”

Cinda said three other new investors are also buying shares. These are the state-owned Yufu Capital; a unit of Hong Kong-listed smartphone component manufacturer Sunny Optical Technology (Group) Company; and a company controlled by the Chinese Internet conglomerate NetEase Inc.

Ant is contributing half of the new capital and will retain its 50% stake in Chongqing Ant Consumer Finance Company, while another existing shareholder will reinvest and maintain their stake.

Consumer-finance firms in China have a minimum registered capital requirement for lending. That capital can also help determine which regulatory leverage ratios a firm can lend the most, and can be used to fund bank deposits, bulk borrowings from other financial institutions and asset-backed securities as well as funds. can be used as a source.

Cinda started out as one of the “bad-debt managers” created to help China’s big banks settle sour loans. It was not previously a direct investor in the Ant unit, but its subsidiary Nanyang Commercial Bank Limited had previously contributed capital. and will now hold 4% stake.

This story has been published without modification in text from a wire agency feed