One of China’s largest state-owned asset managers will control a 24 per cent stake in Ant Group’s consumer finance company, after joining a Rmb22bn ($3.5bn) fundraising exercise that will more than triple its registered capital.
China Cinda Asset Management, which is owned by the country’s finance ministry, said in a statement to the Hong Kong stock exchange that it will contribute Rmb6bn, giving it a 20 per cent stake in Chongqing Ant Consumer Finance. Cinda will effectively hold another 4 per cent through a subsidiary, Nanyang Commercial Bank.
Ant is controlled by Jack Ma, the embattled internet tycoon, and has been pressured by Chinese regulators to increase its capital base and introduce state investors ever since its $37bn initial public offering, which would have been the world’s largest, was blocked just days before its debut in November 2020.
Ma, once a regular star performer at high-profile Chinese and international conferences, has largely disappeared from public view since Ant’s IPO was cancelled. Ma was spotted vacationing on his luxury yacht in Spain in October — his first confirmed overseas trip since Ant and Alibaba, his flagship ecommerce unit, were targeted by regulators.
Ant was granted a licence for its Chongqing-based consumer finance unit by China’s banking regulator in April.
When it was established, Nanyang Commercial Bank held 15 per cent of the unit and state-owned China Huarong Asset Management another 5 per cent.
Both Nanyang and Huarong will be diluted by the capital raising, which will make Cinda the unit’s second-largest shareholder. Ant Group will retain a controlling 50 per cent stake interest in the company.
In its statement, Cinda said the investment would enable it to gain a firmer foothold in China’s booming online consumer credit industry, by allowing it to “establish close co-operation with leading consumer finance providers”.
At its height, Ant’s consumer finance operations issued about one-tenth of China’s non-mortgage consumer loans through its Alipay app. The group’s state-owned bank rivals argued that before the government’s crackdown on Jack Ma’s empire over the past year, Ant unfairly benefited from lower capital and other regulatory requirements.
Cinda has established itself as an increasingly important arm of the state.
In addition to the substantial stake it will take in Ant’s consumer finance unit, a Cinda representative also sits on a risk management committee established by China Evergrande, the highly indebted private-sector real estate developer that was recently declared to be in “restricted default” by Fitch Ratings.
Huarong, by contrast, has lurched from one crisis to another this year. In January its former head, Lai Xiaomin, was executed for alleged corruption. He had been sentenced to death by a court in the port city of Tianjin just three weeks earlier.
In August Huarong announced a $16bn loss and said it would receive unspecified strategic investments from other state-owned finance companies including Cinda.
Additional reporting by Ryan McMorrow in Beijing
China Cinda takes 24% stake in Ant’s consumer credit unit
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