Ant Financial Buys Stake in Linewell to Make Government Software

TANG SHIHUA

(Yicai Global) Jan. 14 — Chinese fintech firm Ant Financial Services Group, which runs the third-party payments app Alipay, plans to pay CNY306 million (USD45 million) for a stake in Linewell Software Group and work with the company to develop a digital government administration platform.

Ant’s Shanghai Yunxin Venture Capital Management signed an equity transfer deal with Linewell’s controlling shareholder and Chairman Wu Zhixiong on Jan. 11, the Fujian province-based software maker said in a statement. The buyer will pay CNY10.24 (USD1.5) a share for a 5.68 percent stake, a shade below Linewell’s [SHA:603636] closing price of CNY10.4 on the day the deal was signed, and leave Wu with a 51.1 percent holding.

Linewell’s share price hit the 10 percent daily limit up in trading this morning, but as of 11.10 a.m. had simmered to CNY10.5, just less than 1 percent above its previous close.

Linewell creates software for a host of China’s government agencies, including general offices of the Communist Party’s Central Committee and the State Council and departments under the National Development and Reform Commission and Ministry of Public Security. The pair, including Ant affiliate Beijing Ant Financial Cloud Information Service, will work together to develop software for such clients, the statement said.

Editor: James Boynton