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China plans to break up Ant's Alipay

China seeks to break up Ant Group’s Alipay and create a separate app for its loan business

According to the Financial Times, Beijing decided to break up Alipay, the immensely popular payments app run by Jack Ma’s Ant group, and create a new app for the company’s very profitable loans business. Ant will also hand up the customer data that informs its lending decisions to a new credit score joint venture, which will be partially owned by the government.

For the first time, state-backed enterprises are expected to acquire a substantial stake in Ant’s credit-scoring joint venture, according to three people who spoke to Reuters last week.

According to one of the people, the partners plan to launch a personal credit-scoring company in which Ant and Zhejiang Tourism Investment Group Co Ltd will each own 35 percent of the company, with other state-backed partners Hangzhou Finance and Investment Group and Zhejiang Electronic Port holding slightly more than 5% each.

According to the Financial Times, Ant will not be the only online lender in China affected by the new regulations. A request for comment from Reuters was not immediately responded to by the company.

Chinese regulators asked Ant in April to undergo a major business restructuring, including converting Ant into a financial holding company and merging its two lucrative micro-loan businesses, Jiebei and Huabei, into a new consumer finance firm.