Ant Financial Sub Purchases Listed Finance Company

Financials Author: Jia Li Mar 21, 2019 07:23 PM (GMT+8)

CSII published an announcement on the night of March 20 declaring Shanghai Yunxin has bought around 6,849,800 shares through the open market. This accounts for 3.4% of the total equity issued. 

Ant Financial Sub Purchases Listed Finance Company. PHOTO: Credit to iYiou

CSII (柯蓝软件) published an announcement on the night of March 20 declaring Shanghai Yunxin(上海云鑫) has bought around 6,849,800 shares through the open market. This accounts for 3.4% of the total equity issued. 

Shanghai Yunxin is the fully owned subsidiary of Ant Financial and mainly for investment purposes. It has invested in EO500 companies such as Megvii (AI unicorn), Dasouche (second-hand car trade platform), Orbeec (AI), and Newcapec Electronics (smart campus). 

It also shows on Wind, a financial data service provider, that Hundsun Technologies (恒生电子) is the third largest shareholder of CSII holding 10,096,161 shares (8.2%)

Hundsun Technologies has been controlled by Ant Financial through indirect investments. Jack Ma is the person who holds the ultimate ownership.

On March 19, just a few days earlier, CSII has signed a business cooperation agreement with one of Ant Finance's Beijing-based subsidiary to provide mobile internet financing platform solution and work on the core financing system.

The agreement is simply treated as a framework agreement, the amount and time for collaboration have not yet been confirmed in this agreement. 

Overall, the market sees this cooperation positively. The day after the investment announcement, the share price of CSII has increased 10% reaching the daily upward limit.

CSII was listed in 2017 and traded on the ChiNext, the start-up board at the Shenzhen Stock Exchange. It has performed bullish for the past three months increasing by 101.64% against the industry average of 52.82%. 

CSII's share price has increased 26.45% in the 5-day trading period and 72.24% in the 1-month trading period. The figures for the industry average are -0.85% and 28.99%.

CSII was founded by some professionals having working experience at the Wall Street or Silicon Valley in 1999. In 2012, it started to work on the mobile payment platform. And in 2014, it has started to work on the direct banking system and finance open platform.

CSII's main business focuses on financial software application development and consulting services. Its clients include the leading state own banks such as Bank of China, Agricultural Bank of China, China Construction Bank etc. According to a report published by IDC in 2014, CSII has taken up 80% of the market share in the Chinese direct banking field.

Now the company has around 3,000 employees and operates branches in Beijing, Shanghai, Zhejiang, Chengdu, Shenzhen, Hongkong etc. 

The cooperation of the two will promote Alibaba's finance cloud to traditional financial institutions. CSII's existing customer bases can be used as a channel to target those traditional institutions. 

Although Alibaba's finance cloud is about cloud computing, it does not belong to the Alibaba Cloud division. It belongs to Ant Financial instead.

On the other side, Ant Financial could provide its advanced cloud computing technology and big data-based risk control.

Currently, there is a trend for the Chinese financial institutions to move to the cloud. According to data cited by Leipone, the market size for finance cloud in China reaches CNY 8 billion (USD 1 billion). By 2020, the total market can be expected to reach CNY 20 billion (USD 3 billion).