Ant Group’s restructuring hits a snag as Cinda, Yuyue unexpectedly pull out of Chongqing Ant’s capital raising plan
- Cinda said its board decided “not to participate” in the plan to pay 6 billion yuan for an additional 20 per cent stake in Chongqing Ant, first announced on December 24
- Cinda’s withdrawal created a ripple effect, prompting Jiangsu Yuyue Medical Equipment & Supply to defer its 1.1 billion yuan plan to raise its stake, according to a statement
Cinda Asset Management has unexpectedly withdrawn from the recapitalisation of Chongqing Ant Consumer Finance barely three weeks after announcing it, adding a surprising twist to the restructuring of China’s largest fintech company.
“After further prudent commercial consideration and negotiation with the target company, [Cinda] proposed not to participate in the share subscription,” the company said, without naming Chongqing Ant.
The Beijing-based company, set up in 1999 to manage the bad loans of China Construction Bank, did not say why it withdrew from the December 24 plan. Cinda owned 15 per cent of Chongqing Ant through its wholly owned unit Nanyang Commercial Bank as of June 2021, according to regulatory filings.
Chongqing Ant “fully respects the business decision made by its investor,” the company said in a statement, adding that it would “actively hold discussions with investors, continue to finalise the capital increase proposal as soon as possible in accordance with market principles, and ensure the rectification work on the consumer finance business is effectively carried out”.
Redefining fintech
In its announcement last Christmas Eve, Cinda had agreed to raise its stake in Chongqing Ant, part of the plan to raise Chongqing Ant’s capital base to 30 billion yuan from 8 billion yuan. Ant Group would continue to hold 50 per cent of Chongqing Ant in the restructuring of Jack Ma’s fintech empire under regulatory oversight.
Ant Group was required to bring its microcredit and consumer loan businesses under regulatory oversight after its dual listing was called off.
Chongqing Ant was created to take over its Huabei and Jiebei businesses and the vehicle is expected to complete the process within a year, according to a statement from the Chongqing financial regulator in June 2021.