China-based payment services provider Ant Group’s Chongqing Ant Consumer Finance subsidiary has suspended plans to raise fresh funding, reportedly as part of the country’s crackdown on its technology companies.
One of the prospective investors, state-owned asset management firm China Cinda Asset Management, first revealed the decision in a filing on the Hong Kong Stock Exchange (HKSE).
The move followed an announcement last month stating Cinda was set to acquire an additional 20% stake in Ant Consumer Finance for $944m that would have made it the second largest shareholder, with a 24% stake.
State authorities including China’s State Council have reportedly pressured Cinda to abandon the plans because Ant Consumer Finance’s parent firm is still undergoing reorganisation, two sources told Reuters. Ant Group would have remained its largest shareholder, with 50% post-funding.
Medical equipment manufacturer Jiangsu Yuyue Medical Equipment & Supply and optical lens provider Sunny Optical Technology Group, which had both agreed to invest in Ant Consumer Finance, have also decided to delay their plans, according to statements on the Shenzhen Stock Exchange and the HKSE respectively.
Ant Consumer Finance was formed in June 2021 when Ant Group, an affiliate of e-commerce group Alibaba, received regulatory approval to run an independent consumer finance company to carry out its restructuring efforts.
Ant Group’s proposed $37bn dual listing, due to take place on Shanghai’s Star Exchange and the HKSE, was delayed in late 2020, after which its microcredit and consumer loan businesses came under regulatory supervision.
Ant Consumer Finance said in a statement it respects its investors’ business decisions, and would continue to hold discussions with them to finalise the funding, complying with market principles and rectifying its consumer finance business.
China began a regulatory reform in late 2020 targeting internet and tech groups, and its initiatives have included anti-monopoly, enhanced data security and content censorship measures.
Internet company Tencent’s revenue growth slowed to its lowest level in the third quarter of 2021 since it went public 17 years earlier, according to New York Times, which added that Alibaba also posted a year-on-year 38% decline in profitability.
Ride hailing service Didi booked a $6.3bn loss during the first nine months in 2021, and in July the authorities banned new users from registering and removed its offering from app stores while a cybersecurity investigation was conducted.
