Ant’s consumer finance unit to more than double capital to $2.62 billion

HONG KONG, Nov 14 (Reuters) – China’s Ant Group consumer finance unit will raise its registered capital to 18.5 billion yuan ($2.62 billion) from 8 billion yuan previously, in part by recruiting new investors, underscoring a step forward for the fintech giant’s years-long overhaul.

Ant will invest 5.25 billion yuan in the capital injection to retain its 50% stake in the unit, Chongqing Ant Consumer Finance Co Ltd, according to an exchange filing Monday by the minority shareholder of unit, Yuyue Medical (002223.SZ).

Among the new investors is Hangzhou Jintou Digital Technology Group, which is controlled by the local government of the city of Hangzhou, which is home to Ant’s headquarters. It will invest 1.85 billion yuan to become the second largest shareholder with a 10% stake, according to the filing.

The planned capital raise would be a big move for the unit, which has come under regulatory pressure to combine Ant’s two lucrative micro-lending businesses, Jiebei and Huabei.

It could also help Ant near the end of its regulatory-focused overhaul and reinvigorate its plans for its public market debut after its $37 billion bid to double-list was derailed at the last minute in November. 2020.

Other new investors include logistics and financial services company Transfar Zhilian Co Ltd (002010.SZ) and Chongqing Rural Credit Investment Group, a company backed by the local government of Chongqing city, where the unit is based. consumer credit from Ant.

Yuyue Medical, Sunny Optical Technology Group Co Ltd (2382.HK) and Boguan Technology, a unit of gaming major NetEase Inc (9999.HK), will also participate in the capital raise, according to Monday’s filing.

The unit had previously planned to raise its capital to 30 billion yuan, including 6 billion yuan from state-owned asset manager China Cinda Asset Management Co Ltd (1359.HK).

Cinda, which held a stake in the unit through its subsidiary Nanyang Commercial Bank Ltd, however in January canceled a deal to buy a 20% stake due to pressure from state authorities, sources told Reuters .

Following Cinda’s decision, other investors who previously agreed to the capital increase in the same month, including Yuyue Medical and Sunny Optical, said they would also postpone their investments.

Ant and other investors set up the financial firm in August 2020, aiming to make it one of China’s biggest consumer credit players, before Beijing launched its unprecedented regulatory crackdown on tech companies. .

In April last year, Chinese regulators asked Ant to carry out a radical overhaul of its business, including turning Ant itself into a financial holding company and integrating Jiebei and Huabei into the credit unit at the consumption.

This would subject Ant, whose business spans payment processing to the distribution of insurance products, to rules and capital requirements similar to those of banks.

Reuters reported in February last year that Ant was in talks with other shareholders in its consumer finance unit to bolster the firm’s capital base to meet regulatory adequacy requirements. of capital, as it prepared to retreat into its two micro-lending businesses.X

($1 = 7.0662 Chinese yuan renminbi)

Reporting by Julie Zhu; Editing by Susan Fenton, Kirsten Donovan

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