Ant Group units' 18 billion yuan ABS issues terminated
Published: May 25, 2021 11:48 AM
Photo taken on Oct. 15, 2020 shows the headquarters of Ant Group in east China's Hangzhou city.Photo:Xinhua

Photo taken on Oct. 15, 2020 shows the headquarters of Ant Group in east China's Hangzhou city.Photo:Xinhua

Two asset-backed securities (ABS) issues separately by two online lending subsidiaries of Ant Group, the Alibaba financial offshoot, were terminated on Tuesday, according to notices posted on the Corporate Bond Information Platform of Shanghai Stock Exchange (SSE), China's main exchange for corporate bond trading.

One ABS financing, worth 10 billion yuan ($1.52 billion), was issued by the unit that operates Jiebei, a short-term consumer loan provider which uses Alibaba's payment tool Alipay. And the issue started to be handled on November 20 2020, according to the website of SSE. While the other ABS, worth 8 billion yuan, issued by the unit that operates Huabei, which provides services like a virtual credit card via Alipay, started to be handled on October 29 2020.

Both units are based in the Southwest China's Chongqing Municipality. The companies form the bulk of Ant's credit business which accounted for close to 40 percent of its revenue in the first half of 2020, media reports said.

Data from financial data provider Wind showed that in 2017, the ABS issued by the two microloan firms reached to 269.2 billion yuan, compared with 49 billion yuan from the previous year, revealing huge profit potential.

ABS is a financing instrument in China market via which a wide range of assets such as loans, real estate and toll ways can be converted into tradable bond-like securities.

After its mega IPO was halted in early November last year, Ant saw its two units get their ABS issues, each worth 10 billion yuan, approved by the SSE on November 20 and November 23 2020.

Ant has been rectifying its financial business. Since the interview with financial regulators in December 2020, Ant established a special task force to draw up its rectification plan under the guidance of the regulatory authorities.

Ant will apply to transform itself into a financial holding company as part of a multifaceted rectification plan that touches on various aspects of the firm's businesses, including payment and consumer data, Pan Gongsheng, deputy governor of the People's Bank of China, said in a statement in April, after top financial regulators summoned the fintech giant for another regulatory talk over its problematic financial business practices.

Ant was required to correct anti-competitive behavior in the payment business, give consumers more choices in payment methods, break improper connections between Alipay and other financial products such as Huabei and Jiebei, and correct irregular behavior in the payment link.

Global Times