Prior to its IPO Ant Group is registering a company, which plans to become the largest player in China’s consumer lending market.
The fintech division of Chinese tech giant Alibaba Group, Ant Technology Group, is planning to create a company that will focus on consumer online lending.
The company is going to register in Chongqing, located in the southwest of China. AntGroup will join its efforts with Nanyang Commercial Bank (NCB) and China TransInfo Technology, supported by Alibaba to launch the business. CATL is also among the founders of a new enterprise.
The sources claim that the size of partners‘ investments will be about 8B yuan (approximately $ 1.2B) in the joint venture as a contribution to the company’s authorized capital. The corresponding agreement should be signed this Friday. Ant Group will own 50% share in a new company, NCB and TransInfo will receive 15% and 10% of the capital, respectively. According to informed sources a new company, which could begin operations at the end of 2020, aims to become the largest player in the consumer lending market of China.
AntGroup has already opened two microlending firms in Chongqing. The joint venture will help this business, because an organization that has received credit status, under Chinese law, can issue much larger loans. The “leverage” of such a company can be ten times the size of its authorized capital, while the total volume of loans of a microcredit organization can exceed its authorized capital by only two or three times.
At the end of last month, AntGroup officially announced plans to conduct an IPO on the HongKong and Shanghai exchanges. According to Caixin, the company intends to raise up to $ 30 billion during the double placement: Ant, which is estimated at $ 200 billion, will place 10% of its shares on the Shanghai STAR stock exchange (similar to NASDAQ) and 5% on the Hong Kong stock exchange.