Ant wins China’s approval to set up consumer-finance company1 min read . Updated: 03 Jun 2021, 06:05 PM IST
- Jack Ma-controlled mobile-payments company will hold a 50% stake in the new entity, with the rest held by six other shareholders
China’s banking and insurance regulator said Thursday that it had approved an application by Ant Group Co. to set up a consumer-finance company, the first milestone in the financial-technology giant’s restructuring.
Ant will hold a 50% stake in the new entity, registered in the southwestern municipality of Chongqing, with the rest held by six other shareholders. The company, Chongqing Ant Consumer Finance Co., is licensed to conduct consumer lending and other operations. It will hold Ant credit services Huabei and Jiebei, which have been used by almost half a billion people in China.
Ant, a mobile-payments company controlled by billionaire Jack Ma, has been forced to overhaul its business after Chinese authorities canceled its initial public offering in November.
One of the areas that drew Beijing’s ire was Ant’s colossal consumer-lending business. At the end of June last year, people who had borrowed money from Ant’s platforms had a total of the equivalent of $271.1 billion in outstanding loans.
Ant originated most of the loans in partnership with commercial banks, which provided the bulk of the funding for the debt. Many of the loans were taken out by young people without established credit histories. Regulators frowned upon Ant’s activities because they encouraged some people to borrow and spend beyond their means and created risks for the banks that supplied funds for the loans.
The shareholders in the new consumer-finance company include two state-owned financial institutions. Nanyang Commercial Bank, a subsidiary of state-owned China Cinda Asset Management Co., holds a 15.01% stake, while China Huarong Asset Management Co., one of the country’s largest managers of distressed assets that also operates other financial businesses, owns 4.99% of the business.
China’s largest producer of lithium batteries for electric vehicles, Contemporary Amperex Technology Co., has an 8% stake. The remaining owners are the mainland Chinese subsidiary of a Taiwanese bank, a transportation and surveillance-services provider, and a medical-device manufacturer. Alibaba Group Holding Ltd., which owns a third of Ant, has a minority stake in the transportation and surveillance-services provider firm.
Ant said Thursday that under the guidance of regulators, it will work with the other shareholders of Chongqing Ant Consumer Finance “to serve the needs of consumers, and to continue enhancing the quality of financial services and risk-management capabilities."
This story has been published from a wire agency feed without modifications to the text.
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