Weekly Roundup: Chinese Fintech Deals
P2P platform Phoenix Finance received USD 80M Series A investment
Founded in September 2014, Phoenix Finance is a subsidiary of Phoenix New Media, the leading Chinese satellite television company that has attracted 500 million viewers over the past 20 years and became the most reputable TV brand among Chinese immigrants all over the world. Phoenix Finance provides operating capital to small business borrowers. The investment and crowdfunding products yield returns that range from 4% to 12% and are guaranteed by third-party institutions. Based on data from its website, Phoenix Finance manages RMB 7.5 billion in products and has over 1.3 million registered users.
The platform states its strategy is “to build a global intelligent finance platform.” Phoenix’s brand recognition in international Chinese communities provides opportunities to attract international investors and to partner with financial institutions outside of China. Phoenix Finance also takes advantage of the latest advancements in big data to help manage risk and to target the right audience amongst its parent company’s 500 million viewers.
This Series A investment was led by two large SOEs: CITIC Asset Management under China CITIC Group and CASH Capital Investment Management under the Chinese Academy of Science Holdings.
Online wealth management platform PPmoney acquired public company TR Technology
Founded in 2012, PPmoney is one of the top P2P platforms in China. According to its website, PPmoney manages RMB 30 billion in investments and has over 5.6 million registered users. The platform offers short-term and long-term investment products to individual and business investors. Debts are originated from third-party products from commercial banks, factoring assets and collateral loans guaranteed by stocks and properties.
In November, PPmoney first announced the acquisition of TR Technology, a public company trading on China’s OTC market. According to the terms of the agreement, PPmoney would purchase 70% of TR Technology’s equity in cash, and TR Technology would purchase PPmoney’s innovative financial service business for RMB 1 million. On December 8, TR Technology issued an announcement clarifying that its existing business would not be affected by the merger and that this transaction was not a reverse takeover.
P2P platform with FICO model XYB received RMB 100M Series A investment
Founded in 2013, XYB is a P2P platform supported by a FICO credit risk management model. FICO scores measure consumer credit risk in the US and have been well-applied in risk assessment. XYB applies FICO’s model to assess and mitigate borrowers’ credit risks. Like most P2P platforms, XYB offers investment products with returns ranging from 7% to 13%, and individuals and business borrowers may apply for both secured and unsecured loans from the platform. According to its website, XYB manages RMB 500 million in investments and has 270,000 registered users.
The recent Series A investment was led by Lang Ma Feng Investment, along with Sino-US Venture Capital and Hermed Capital. Recently, XYB also partnered with Bank of Langfang, a small municipal bank near Beijing, for fund supervision services and UniTrust Time Stamp Authority for verifications of support documents.
Auto mortgage specialist HX P2P received RMB 100M investment from Zhunan Group
Founded in 2013, HX P2P provides loans that are guaranteed by automobiles. The platform only accepts automobiles as loan guarantees. HX relies on offline investigation for risk assessment, and all borrowers must submit an application in person at an HX store. According to its website, HX P2Pmanages RMB 1.1 billion in investments.
While Zhunan Group is a household name, it is new to the fintech/high tech sectors. Founded in 1984, the privately owned company focuses on trade, real estate development, construction and steel production. Based on the recent announcement, Zhunan purchased a 15% stake in HX P2P for RMB 100M. It is this older, well-established enterprise’s attempt to transition into a different sector during a time when the steel and real estate industries are cooling down. Meanwhile, HX P2P has an opportunity to expand its offline network with Zhunan’s existing properties.
Postal Savings Bank of China raised RMB 45.1B from 10 Investors
Postal Savings Bank of China raised RMB 45.1B in the sale of 17% equity to a diverse group of investors: six global institutions including UBS, JP Morgan, Temasek investment fund and DBS from Singapore, Canada Pension Plan Investment Board and the IFC arm of the World Bank; two Chinese internet giants Alibaba and Tencent; and two SOEs China Telecom and China Life. The bank already has plans to go public in Hong Kong in 2016, and this pre-IPO funding was important in forming strategic partnerships and demonstrating investor support. Postal Savings Bank of China is the former post office network of China. There are over 40,000 locations serving a population of over 500 million, and the network even covers the most remote areas of the country. With its extensive geographic network and client base, the postal bank has great potential but is underdeveloped as a commercial bank because of poor management remaining from its post office history.
It may seem ironic that a conservative and underdeveloped commercial bank in China is partnering with such a well-recognized group of global, savvy investors. However, the landscape has changed since other Chinese state banks pursued IPOs. Now private companies like Alibaba and Tencent are often included on the investor list. Foreign institutions are more involved in the process, not only as passive investors but also as strategic partners that help to grow and develop the bank.
Wealth management platform Sack Financial raised RMB 420M in new capital
Founded in December 2014, Sack Financial is an online wealth management platform and a subsidiary of CITIC Industry Investment Fund Management. CITIC owns two fintech platforms: CTCF provides only online lending services, and Sack Financial provides only investment products. All assets on Sack Financial are supplied by CTCF. According to its website, Sack Financial manages RMB 3.8 billion in investments.
In early December, Sack Financial and CTCF raised capital and received RMB 420M from three entities: Avic Trust, their parent company CITIC Industry Investment Fund Management, and Beijing’s number one retail chain BHG.
Credit data analyst Dashu Financial received RMB 500M Series B investment
Founded in July 2014, Dashu Financial focuses on managing risk with data analysis and providing large unsecured loans. The platform currently issues loans based on cash flows, insurance policies, automobile collateral, property collateral, business activities and even college degrees. According to its website, Dashu Financial helps small businesses and consumers who are having trouble getting legitimate loans from banks. Dashu Financial also supplies debt to banks, trusts and other institutions as assets.
The company received an RMB 500M Series B investment led by PAG Investment and Sequoia Capital.