Cinda, under Beijing pressure, scraps $944 mln investment in Ant unit -sources

China Cinda Asset Management

17/01/2022 09:22

Jan 17 (Reuters) - China Cinda Asset Management Co Ltd
 1359.HK  scrapped a deal to buy a 20% stake worth about $944
million in fintech giant Ant Group's consumer finance arm
because of pressure from state authorities, people with
knowledge of the matter said.
    Cinda, one of the four biggest state-owned asset management
companies (AMCs) in China, announced the scrapping of the
planned Ant investment on Thursday, without elaborating on the
reason.
    The decision could further delay a regulatory-driven revamp
of Ant, an affiliate of Alibaba  BABA.N , and the revival of its
public market debut after its $37 billion dual-listing attempt
was derailed at the last minute in November 2020.
    Cinda's crucial capital injection into Ant was endorsed by
its primary regulator - the China Banking and Insurance
Regulatory Commission (CBIRC) - but it failed to secure approval
from higher government authorities, said two sources with direct
knowledge of the matter.
    One of the sources said China's State Council, its cabinet,
was one of the authorities that questioned Cinda's bid to invest
in Ant while the fintech firm's core business was still in the
middle of restructuring, and finally rejected it.
    The rejection was also triggered by concern that the deal
could run counter to state AMC's direction of reform that
requires asset managers to focus on their core business of
disposal of soured loans, and the divesting of non-core assets,
the second source said.
    Cinda on Monday declined to elaborate beyond its Thursday
statement announcing the pullback, in which it said the decision
came after prudent commercial consideration and negotiation with
Ant's consumer finance unit.
    Ant did not respond to a Reuters request for comment. 
    Last week, the company said it respected the "business
decision" of Cinda and that it would "ensure the rectification
work" for the consumer finance unit was carried out.
 urn:newsml:reuters.com:*:nL1N2TU037
    The CBIRC and the State Council Information Office did not
immediately respond to requests for comment. 
    The sources declined to be identified because of the
sensitivity of the matter.
    Cinda, which was established in Beijing in the late 1990s to
handle soured debts at state banks, counts the Ministry of
Finance as its biggest shareholder. 
    The withdrawn investment plan would have increased Cinda's
interest in Chongqing Ant Consumer Finance Co Ltd to 24% and
would have made the asset manager its second-biggest investor. 
    Ant's consumer finance unit had planned to boost its
registered capital to 30 billion yuan ($4.73 billion) from 8
billion yuan, with 6 billion yuan coming from Cinda, and bring
in new strategic investors. 
    Even after the planned capital raising, Ant would have
retained a 50% stake in the unit, according to Cinda's filing to
the Hong Kong Stock Exchange late last month.  urn:newsml:reuters.com:*:nL1N2T90B3
    Two other investors in the Ant unit - Jiangsu Yuyue Medical
Equipment & Supply Co Ltd  002223.SZ  and Sunny Optical
Technology Group Co Ltd  2382.HK  - that had previously agreed
to the capital increase said on Friday that they would postpone
their investments in light of Cinda's move.
    ($1 = 6.3472 Chinese yuan renminbi)

 (Reporting by Julie Zhu and Cheng Leng; Editing by Sumeet
Chatterjee, Robert Birsel)
 ((cheng.leng@thomsonreuters.com; +8610-5669-2129;))