HONG KONG - China’s Ant Group is in talks with other shareholders in its new consumer finance unit to bolster the firm’s capital as the fintech giant prepares to fold in its lucrative micro-lending businesses, people familiar with the matter said.
Ant plans to bring most of its micro-lending businesses into the unit - equivalent to roughly 1 trillion yuan in outstanding loans - a move which will allow it to maintain operations nationwide and expand more easily, said two sources. But under new draft rules published by China’s central bank in November, Huabei and Jiebei would have to limit their operations to Chongqing unless they obtain new national licences - a potentially lengthy and uncertain process.Another major benefit of shifting the businesses to the consumer finance unit is that consumer finance firms can lend up to 10 times their registered capital while online micro-loan firms are only allowed leverage ratios of 2-3 times.
Micro-lending - loans for small purchases such as smartphones, cameras and white goods - is hugely popular in China. Hong Kong-based Nanyang Commercial Bank holds a 15% stake while Taiwan’s Cathay United Bank holds 10%. Other co-founders include battery maker CATL and Alibaba-backed intelligent transport services firm China TransInfo Technology.
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