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Treasury & Capital Markets
Supply chain finance gets a boost from Ant Financial's new asset-backed securities
Ant Financial to issue China’s first security backed by online retailers’ receivables, opening up a new funding channel for smaller e-commerce suppliers
The Asset 19 Mar 2018
ANT Financial Services Group, operator of online payments service Alipay, has received regulatory approval to launch 2 billion yuan (US$317.4 million) worth of asset-backed securities (ABS).
Ant Financial's ABS are the first of its kind in China as the underlying asset will mainly be borrowings against receivables of suppliers in the e-commerce industry. Most ABS products in mainland China are backed by mortgage loans and car loans.
Ant Financial will launch the security on the Shanghai Stock Exchange, according to the bourse.
The regulatory approval is a shot-in-the-arm for China’s supply chain finance that refers to solutions that use receivables to ease working capital for both the buyer and supplier. In practice, supply chain finance allows a supplier to sell its receivables to a bank as soon as they get approval from the buyer. That allows the buyer to pay at a much later date, while suppliers get their money sooner than usual for a fee paid to the bank.
The practice is becoming increasingly common among thousands of online retailers that sell via e-commerce platforms like Alibaba Group Holding’s Tmall and Taobao. One estimate puts China’s supply chain finance sector at 15 trillion yuan by 2020.
Ant Financial is the financial affiliate of e-commerce giant Alibaba Group Holding Ltd. Ant Financial is the largest issuer of consumer loan securities in China, accounting for 60% of all issues in 2017, according to Reuters using data from China Securitisation Analytics.

Ant Financial is among the 250 supply chain finance operators that offer loans to online stores running businesses on Alibaba’s e-commerce platforms, the exchange said. 

Photo: Ant Financial

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