Ant Group consumer finance arm dealt blow by China Cinda pulling out of investment

  • China Cinda Asset Management (OTCPK:CCGDF), a state-owned financial institution and one of the country's biggest bad debt managers, is backing out of planned investment in the consumer-finance arm of Jack Ma's Ant Group, a setback for the fintech's lending-business restructuring.
  • Cinda (OTCPK:CCGDF) said it decided not to participate in a share subscription "after prudent commercial consideration and negotiation" with Chongqing Ant.
  • As part of its restructuring to appease China's financial regulators, set up Chongqing Ant in June to hold its consumer-lending business. Ant owns half of the unit, while a group of six other companies own the other half. Nanyang Commercial Bank, a Cinda subsidiary, with a 15% stake, is the second-largest shareholder.
  • In December, Chongqing Ant said it was expecting to get $3.5B of capital from the share sale, with about $943M of that coming from Cinda (OTCPK:CCGDF).
  • Regulators are urging Ant Group's consumer finance arm to put Ant's two profitable micro-loan businesses — Huabei and Jiebei — into it, Reuters said, a move that would subject the company to rules similar to those of banks.
  • Chongqing Ant said it will hold talks with investors and will make sure that "rectification work on the consumer finance business is effectively carried out," Reuters said.
  • In January 2021, Ant, which is partly owned by Alibaba (NYSE:BABA), announced a plan to convert into a financial holding company in response to pressure from regulators.

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