Ant Financial to issue China’s first security backed by loans to online retailers
Move opens a new financing channel for smaller retailers selling through big e-commerce sites
Ant Financial Services Group, operator of online payments service Alipay, has received regulatory approval to launch China’s first traded security backed by loans to online retailers, opening up a new financing channel for the e-commerce industry.
A subsidiary of Ant Financial will launch 2 billion yuan (US$317.4 million) worth of the asset-backed securities (ABS) on the Shanghai Stock Exchange, the bourse said in a statement on Friday.
So-called supply chain finance – or lending to small and medium-sized companies that supply goods to large firms – is taking off in China in tandem with the surge in e-commerce activities. It is becoming common among the thousands of online retailers who sell via huge e-commerce platforms, such as Alibaba Group Holding's Tmall and Taobao Marketplace.
“Supply chain finance has good prospects in China because it offers necessary financing services to small businesses,” said Hao Zhiwei, chief executive of Haowenhaokan, an advisory firm serving web-based companies. “The approval for an ABS will bolster supply chain finance players’ confidence.”
Forward Business, a Shenzhen-based consultancy focusing on the information technology sector, estimated that China’s supply chain finance sector will be worth 15 trillion yuan by 2020.
