Ant Group, the digital payments arm of Chinese e-commerce group Alibaba, plans to sell its prized US asset after heightened tensions between Beijing and Washington over fast-growing Chinese tech companies and closer scrutiny of US user data .
The planned sale of EyeVerify, a biometric security company based in Kansas City, Missouri, also comes as Ant seeks to raise capital ahead of potential fines and restructuring costs following its abortive year-round IPO. latest, including a proposed bond issue that could bring in up to $ 8. bn.
Ant bought EyeVerify for around $ 100 million in 2016, case that has been deleted by the Committee on Foreign Investments in the United States (Cfius), marking its first investment in an American company.
The company, whose technology is used by banks including Wells Fargo, scans images of its users’ eyeballs as passwords for mobile services. It is currently a subsidiary of Zoloz Global, owned by Ant.
Ant is speaking with a number of potential buyers in the United States, according to two people familiar with the matter. One of the people said Ant plans to make a sale in the first half of this year. Ant declined to comment.
The Trump administration stepped up its scrutiny last year over Chinese companies that manage the private data of U.S. citizens, particularly the TikTok and WeChat mobile apps.
“EyeVerify was targeted by some in the previous administration as a source of data security concerns,” said Roger Robinson, managing director of RWR Advisory Group, a Washington-based research and risk consultancy. “Measures to protect the personal data of Americans will likely continue under President (Joe) Biden for both political and security reasons.”
A senior executive at Ant, who declined to be identified, said his company did not collect data from EyeVerify eye scans. He said that data did not leave the smartphones that performed the scans, meaning neither EyeVerify nor Ant had access to the data.
Ant has attempted to expand its presence in the United States in the face of fierce domestic competition from Chinese rival Tencent Holdings in recent years. But a $ 1.2 billion deal to acquire Texas-based money transfer company MoneyGram International was blocked by regulators over national security concerns in 2018. About 5% of Ant’s business lies outside of China.
In China, regulators effectively suspended Ant’s dual listing in Hong Kong and Shanghai, which was to become the world’s largest stock offering ever, just days before it launched in November.
Ant has dominated mobile payments in China thanks to its Alipay app. However, Beijing has elaborated regulatory changes for FinTech companies expected to severely restrict Ant.
Alibaba is in talks to raise up to $ 8 billion in a bond issue earlier this year to provide liquidity to expand outside of China and pay costs associated with its regulatory woes.
However, the sale of the debt, initially scheduled for early January, has not yet been officially marketed to investors. This has sparked speculation as to whether it will go ahead as Jack Ma, founder and largest shareholder of Ant stay largely out of the public spotlight.