Alibaba’s Finance Arm Gets Green Light to Securitize Illiquid Assets

Alibaba’s Finance Arm Gets Green Light to Securitize Illiquid Assets

She Qingqi & Du Chuan

Date: Tue, 01/16/2018 - 19:03 / source:Yicai
Alibaba’s Finance Arm Gets Green Light to Securitize Illiquid Assets
Alibaba’s Finance Arm Gets Green Light to Securitize Illiquid Assets

(Yicai Global) Jan. 16 -- Two micro-lenders backed by Alibaba Group Holding Ltd. have secured regulatory approval to raise funds through asset-backed securities products, allowing the firms to make cash from their illiquid assets.

Alibaba injected CNY8.2 billion (USD1.3 billion) into Chongqing Ant Business Micro Credit Co. and Chongqing Alibaba Small Loan Co., both affiliates of the group’s payments arm Ant Financial Services Group. The decrease in financial leverage is what bagged the firms the green light, Ant Financial’s Microfinance Director Shao Wenlan told Yicai Global yesterday evening.

The two firms, which specialize in consumer finance and payday lending, decided to begin issuing ABSs worth billions of dollars late last year. But they had to shelve the plans after the People’s Bank of China, the nation’s central bank, increased the minimum funding requirement for microfinance firms to issue financial products.

With the Alibaba injection, the duo now has a combined registered capital of CNY12 billion.

Ant Financial is soliciting interest from stock exchange investors for its new product, Shao said. It will determine the size of offerings in line with regulatory policies.

A source at the asset securitization department of China International Capital Corporation confirmed the offering has got regulatory backing.

Asset-backed securities allow companies to combine low-liquidity assets into a fully tradable security. Under the existing ABS registration, companies may issue the products in separate phases over two years, within a central bank-approved quota.

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Keywords: Alibaba, ANT FINANCIAL