Jack Ma’s Ant continues with reduced fundraising effort

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Jack Ma’s Ant Group is moving forward with plans to raise capital for its lending arm after a major state-owned asset manager pulled out of a previous fundraising deal to the unit.

The fundraiser is part of a government-led restructuring effort for Ma’s fintech company, which has been struggling to revamp its business since Chinese regulators canceled its blockbuster $37 billion initial public offering there. over two years ago.

The deal will yield Rmb 10.5 billion for Ant’s consumer finance unit, about half of the Rmb 22 billion the group originally hoped to raise last year, according to a filing with the company. one of the investors, Yuwell Group.

A government-controlled vehicle in Hangzhou, where Ant is based, is set to fill the void left by China Cinda Asset Management’s surprise exit in January, citing “prudent business consideration”. Hangzhou Jintou Digital Technology will contribute 1.9 billion yuan, securing a 10% stake in the company.

Ant has become a high-profile target in Beijing’s regulatory crackdown on some of the country’s fastest-growing tech groups.

Jack Ma has largely disappeared from public view since criticizing Chinese regulators and banks two years ago © Qilai Shen/Bloomberg

Since Ma slammed Chinese regulators and state banks two years ago, the billionaire has largely disappeared from public view while the two companies he founded, Ant and e-commerce group Alibaba, faced a host of new regulatory hurdles.

Chinese financial regulators have focused on cutting Ant’s business in a crushing “rectification” campaign for the group, which was China’s biggest consumer credit issuer.

Ant’s credit operations, which funnel loans through its Alipay app, were consolidated into a separate unit last year. Ma’s group retained a 50% stake in the newly created company, Chongqing Ant Consumer Finance, and outside investors, including state-owned groups, were brought in to buy the rest of the shares.

The company’s expanded capital base will allow Ant to support more of its online lending business under new government rules created to limit financial risk.

The lending arm had been Ant’s most profitable line of business and accounted for 39% of its revenue in the first half of 2020. Chongqing Ant’s business recorded net income of Rmb 1.1 billion vs. 2 billion Rmb of revenue in the first nine months of this year. year, according to the Yuwell record.

While the capital raise marks progress for Ant’s lending unit, a person close to the business said the group’s regulatory overhaul remains “far from complete”. Ant and Chinese authorities remain at odds over the use of its vast trove of user data.

Qiantang Credit Scoring Co, which is supposed to take over Ant user data for commercial purposes, has yet to receive a commercial license a year after applying for a license from the People’s Bank of China. People close to Qiantang said Ant, which owns a 35% stake in Qiantang, is competing with the central bank for control of the credit rating unit.

“The central bank thinks it’s not safe to put so much data under the control of a private group,” the person said. “It’s better to have a state-backed entity to look after the resource.”

Ant did not immediately respond to requests for comment.


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