Alibaba’s fintech arm Ant Group to set up consumer finance firm in China

Photographer: AFP/Getty Images

Ant Group, Alibaba’s fintech arm and China’s dominant mobile payments company, plans to set up a consumer finance firm in the southwestern city of Chongqing, expanding its presence in the fast-growing domestic business, two sources told Reuters.

The move underlines a broader push by Ant and other Chinese tech majors, including Tencent and Bytedance, to bulk up in financial services closer to home as they battle mounting scrutiny for their technology business overseas and a worsening Sino-US standoff.

Ant, 33 per cent owned by e-commerce giant Alibaba Group Holding, has already amassed a range of financial licences here including payments, online banking, insurance and micro lending to operate in China’s vast financial market valued at trillions of dollars.

Ant plans to team up with Nanyang Commercial Bank and Alibaba-backed intelligent transport services firm China TransInfo Technology for the consumer finance business, said the sources, who have direct knowledge of the matter but declined to be named as the information was private.

Ant will hold about a 50% stake, while Nanyang Commercial and TransInfo will own 15% and 10%, respectively, of the new firm. Other co-founders include battery maker Contemporary Amperex Technology Co Ltd, they added.

The founders plan to invest a total of about 8 billion yuan($1.2 billion) in the firm as the registered capital and look to sign the agreement as early as on Friday, the sources added.

Ant and CATL declined to comment. Nanyang Commercial Bank and TransInfo did not immediately respond to requests for comment.

Ant said last month it had started the process for a dual listing in Hong Kong and Shanghai. The group plans to raise over $20 billion in total from the dual-listing, separate sources have told Reuters.

Booming Demand

The consumer finance firm, which could start operating in the fourth quarter of the year, aims to grow into one of China’s biggest consumer lending players, one of the sources said.

While Ant already runs two micro-loan firms in Chongqing, the new company would be a big boost as the lending scale of a consumer finance firm can reach 10 times its registered capital. The leverage ratio of an online micro-loan firm is only two to three times that amount.

Internet-based consumer financing in China, a lightly regulated sector, surged 400 times to nearly 8 trillion yuan in four years to 2018, according to the Guanghua School of Management.

A pandemic-hit economy has dampened demand for consumer credit, but officials have pinpointed consumer lenders as a key lever in rebooting consumption.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.