China will reportedly break up Ant Group’s Alipay and force creation of new loans app

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Beijing plans to break up Ant Group’s Alipay and create a separate app for the fintech giant’s loans business, according to a Financial Times report on Monday.

Beijing plans to break up Ant Group’s Alipay and create a separate app for the fintech giant’s loans business, according to a Financial Times report on Monday.

Regulators previously ordered Ant to split the businesses of AliPay from lending businesses Huabei and Jiebei. They now want the credit businesses to be split into an independent app as well, according to the FT.

 According to the plan, Ant will turn over user data underpinning loan decisions to a new credit scoring joint venture, the FT reported, citing people familiar with the process. The JV will be partly state-owned, the report said.

Hong Kong-listed shares of Alibaba, Ant Group’s e-commerce affiliate, fell more than 4% on Monday following the FT report. The decline weighed on the broader Chinese tech sector as the Hang Seng Tech index fell more than 2%, and shares of other Chinese tech heavyweights listed in Hong Kong took a beating. Tencent was down 2.45% while Meituan fell 4.47% at the close.

 Reuters said in early September that state-back firms are set to take a sizeable stake in the credit-scoring joint-venture, with Ant and Zhejiang Tourism Investment Group owning 35% each of the venture.

Ant will not be the only online lender in China affected by the new rules, according to the FT.

The latest developments marked more challenges for Ant’s business. The company’s planned $34.5 billion IPO in November was scuttled after regulatory discrepancies were flagged.

 Months of regulatory crackdown on China’s tech giants followed, and Beijing introduced a slew of rules around anti-monopoly and data security and protection.