Ant Group said to plan consumer finance company as it readies for IPO

August 18, 2020.

Chinese fintech is reportedly planning to launch a consumer finance company to serve China’s domestic market as it prepares for its blockbuster initial public offering.

Ant Group, which is controlled by Alibaba Group co-founder Jack Ma, is planning to establish the company in Chongqing and has several fellow investors lined up, Reuters and Bloomberg reported Tuesday, citing unnamed sources. 

The fintech will have a stake of approximately 50% in the consumer finance company, while China TransInfo Technology will have a 10% stake and Nanyang Commercial Bank will have a 15% stake, Reuters reported, adding that additional investors include Contemporary Amperex Technology.

The new company will receive RMB 8 billion (nearly $1.16 billion) in registered capital, Bloomberg and Reuters reported.

Ant Group declined to comment, while Nanyang Commercial Bank, China TransInfo Technology and Contemporary Amperex Technology did not immediately respond to requests for comment outside of local business hours.

The reports come following Ant Group’s disclosure last week that it is preparing for its upcoming IPO by hiring financial firms CSC Financial and China International Capital as advisers to help with the process. The fintech, whose disclosure was posted on the website of the ’s Zhejiang Bureau, said in its filing that the process will include reviews of its connections with related companies, its internal controls and accounting management, and training for staff. It also noted how , its mobile payments platform, is the largest in China.

Ant Group announced its IPO plans last month, stating that it will list its shares on both the Stock Exchange of Hong Kong and on the Shanghai Stock Exchange’s STAR board. It has reportedly been seeking a $200 billion valuation.

Alibaba, in its recent annual report, detailed Ant Group’s history, stating that Alipay was spun off in 2011 in order to make it easier to obtain a Chinese payment business license due to having domestic ownership. Ma had a significant equity majority in Ant Group following the spinoff, Alibaba said, also noting that he has voting control over two entities called Junao and Junhan, which have a combined stake in the fintech of roughly 50%. 

Alibaba also recapped its acquisition of a 33% stake in Ant Group in September 2019 in exchange for ending a profit-sharing agreement.