Fin­tech Ant side­lines banks in IPO sales

Bangkok Post - - WORLD -

As five Chi­nese mu­tual funds tar­get­ing Ant Group’s hotly-an­tic­i­pated IPO kicked off sub­scrip­tions on Fri­day, re­tail in­vestors found the only non-di­rect chan­nel through which to buy the prod­ucts was on­line pay­ment plat­form Ali­pay.

Ali­pay is con­trolled by the Chi­nese fin­tech gi­ant it­self, so the un­prece­dented ar­range­ment, which side­lines banks and bro­ker­ages, high­lights Ant’s clout in on­line sales and threat­ens to dis­rupt tra­di­tional fund sales mod­els.

“This is the first time banks are be­ing ex­cluded from mu­tual fund sales,” one bank of­fi­cial said, speak­ing on con­di­tion of anonymity.

“For banks, it re­ally hurts. Ant is at­tempt­ing to break the dom­i­nance of banks in fund sales.”

Ant, backed by Alibaba Group, plans a dual list­ing in Hong Kong and Shang­hai’s STAR Mar­ket to raise about $35 bil­lion in what could be the world’s largest ini­tial public of­fer­ing.

On Fri­day, money man­agers in­clud­ing China As­set Man­age­ment Co, E Fund Man­age­ment Co and Penghua Fund Man­age­ment started rais­ing as much as a com­bined 60 bil­lion yuan in five funds that will par­tic­i­pate in the Ant IPO as strate­gic in­vestors, with a lock-up pe­riod of 18 months.

But Ant’s fund sales sub­sidiary is the sole dis­trib­u­tor of the five funds, ac­cord­ing to the sales doc­u­ments.

Ant did not im­me­di­ately re­ply to a Reuters re­quest for com­ment.

By by­pass­ing tra­di­tional sales chan­nels, Ant is throw­ing down the gaunt­let to banks, an­a­lysts said.

“In­creas­ingly, tech-savvy young peo­ple are mov­ing money away from bank de­posits, into wealth man­age­ment prod­ucts be­ing sold on­line,” said Liu Yun, an an­a­lyst at Chas­ing Se­cu­ri­ties.

By the close of busi­ness, Ant’s ad­ver­tise­ment pro­mot­ing the newly-launched funds drew more than 3 mil­lion clicks on its su­per-app Ali­pay.

An in­vestor who gave only his sur­name, Han, bought 10,000 yuan worth of the Penghua fund, say­ing in­vest­ing in Ant en­tailed lit­tle risk.

But oth­ers baulked at the funds’ 18-month lock-up pe­riod.

“If I buy the funds now, I can only take out the money in 2022,” said re­tail in­vestor Liu Xiaob­ing. “That’s not ef­fi­cient use of cap­i­tal.”

Ant Fi­nan­cial is forc­ing trans­ac­tions via its plat­form Ali­pay.

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