Monthly Roundup: Chinese Fintech Deals
There was an increasing trend in fundraising activities in April. The surge may be reactions to policy changes announced in China’s National People’s Congress in early March. For example, the Congress the Central Bank of China began encouraging innovations in consumer credit products and auto financing. As a result, many of the fund raises in the past month were completed by consumer credit platforms – 6 out of 9 invested platforms were in consumer credit.
Ant Financial completes USD 4.5B Series B Round
Ant Financial completed a USD 4.5B Series B fund raise with a valuation of USD 60B. The key to success is the firm's payment platform Alipay. Launched in 2004, Alipay first focused on transactions on Alibaba but soon expanded and connected to more e-commerce and service platforms and grew to China’s largest digital payment platform. Besides Alipay, Ant Financial owns and operates money market fund Yuebao, credit scoring system Sesame Credit and loans provider Mybank. According to Eric Jing, President of Ant Financial, the new funding will be used for expansion in the Chinese agricultural industry as well as for global expansion. The company has already acquired 40% of Paytm, an India based platform that is the fourth largest digital payment provider in the world with 122 million users. In South Korea, Ant Financial invested in the online bank K-bank.
The USD 4.5B Series B Investment was led by a subsidiary of China Investment Corporation and China Construction Bank, while the remainder were filled by large SOEs, including China Life Insurance, China Post, China Development Bank Capital and other round A investors.
Previously in March 2016, WSJ first reported that Ant Financial was seeking a new funding round of USD 3.1B while preparing to go public (http://www.wsj.com/articles/alibaba-affiliate-ant-financial-valued-at-nearly-50-billion-1457349947). A month later in April, the Bloomberg quoted from a source that the funding target was lifted to 3.5B (http://www.bloomberg.com/news/articles/2016-04-08/alibaba-affiliate-said-to-lift-funding-goal-to-over-3-5-billion).
JD.com invested in P2P platform Meili Finance in order to expand in used car financing
China’s local fintech firm Meili Finance announced receipt of an undisclosed amount of investment from China’s 2ndlargest e-commerce firm JD.com. JD and Meili Finance will work together on used car financing. JD agreed to provide Meili with continuous funding in future collaborations. JD Finance will also provide the data and technology which will be used to improve Meili’s risk control. Instead of a one-time investment, JD will provide support in funding, business and technology to Meili’s auto financing business.
Also noteworthy, JD picked Meili for its experience and network in auto financing. Since 2015, Meili has established partnerships with 2,000 service centers in 170 cities and initiated over 30,000 auto loans.
Online insurance broker Huize revived RMB 200M Series B Investment
Founded in 2006, Huize (HZ) is an online insurance broker providing sales and claiming services. It is one of the first platforms to receive an online brokerage license from the insurance regulators.
HZ partnered and developed a data interface with 64 Chinese and international insurance companies. Users may compare over 1,000 products and complete purchases and even file claims online through HZ’s website and APP. According to its website (http://www.huize.com/), HZ has generated 100M insurance policies issued to over 5M users in the past 10 years.
The RMB 200M Series B investors include private equity firms Wanrong Capital and CDF Capital, and mobile payment company Lakala.
Health-focused insurance platform Datebao received USD 20M Series B investment
Datebao (DTB) was founded in August 2014 and soon received an online insurance broker license. The mission is to improve the quality of service and lower the prices of health and accident insurance.
Unlike the comprehensive insurance broker Huize, DTB focuses on health care and accident insurance and targets children, women and senior groups. The platform partners with a dozen insurance and reassurance companies and presents customized products. In addition to sales, DTB also provides claiming service free of charge. To improve user experience, the platform makes advance payments to users in cases where insurance companies process repayments in less than 60 days.
China Development Financial, a Taiwan based investment bank led the USD 20M Series B investment, followed by Ce Yuan Ventures, Fosun Capital and other former investors.
Data-focused lending platform ASTO received RMB 100M Series B Investment led by Tencent
Founded in 2013, ASTO (www.yuanbaopu.com) provides financial services to small and midsize enterprises and focuses on online financial data. The platform only lends to merchants on major e-commerce platforms because their inventory, transaction, tax and cash flows are saved in a publicly-available database. ASTO obtains the data from e-commerce platforms and calculates the merchants’ risk levels. As a result, lending at ASTO is an automated online process and takes lenders as few as 4 hours to receive a business loan. The loans currently offered on ASTO are usually under RMB 1M with repayment periods under 1 year. The minimum annual interest rate is 13%.
Tencent led the RMB 100M Series B investment and Banyan Capital followed. With the new funding, ASTO is expanding to personal lending with the same model – lending to individual consumers with sound transaction histories on e-commerce platforms.
Personal loan provider Omni Prime received Series C Investment led by Shunwei Capital and JD Finance
Founded in March 2014, Omni Prime provides financing services for electronic purchases and focuses on the young labor workers market. The primary target is blue collar workers in the 18 to 35 age group who work in urban areas. They work hard at construction sites, manufacturers and restaurants, far from home but are highly motivated. Omni Prime helps these workers finance cell phones, tablets and other small electronics. According to its website (http://www.fenqi.im/#), a user could receive the funds within 15 minutes after applying for the loan on APP.
The founder of Omni Prime is Dan Hu, former VP of Sequoia’s China foundation and a specialist in technology and telecom. The recent Series C was led by Shunwei Capital and JD Finance, followed by Renren Inc. and Morningside Ventures. The enterprise did not disclose the investment amount, but the total fund amount in all previous rounds was over USD 86M.
Business loan provider Chedai.com received a RMB 217M Series A+ Investment led by China Growth Capital
Founded in December 2013, lending platform Chedai.com focuses on financial needs in the auto industry. It offers short to mid-term business loans to enterprises in China’s auto industry. The platform offers financing products specially designed for car dealers, leasing companies and freight companies. A wide range of loan terms is revealed on the website: credit limit ranges from RMB 50,000 to 50,000,000 and repayment periods from 30 days to 24 months. The borrowing relies on an offline application process at service centers located in 41 cities nationwide. According to its website, Chedai.com has managed RMB 4B of credit as of October 2015 (http://www.chedai.com/home/other/aboutus.html) .
The RMB 217M Series A+ Investment was led by China’s local VC China Growth Capital, followed by Matrix Partners China and Youjin Capital. Chedai.com plans to expand to used-car financing and after-sale service sectors within the auto industry.
P2P platform focused on the listing company Licaifan received RMB 330M Series C Investment
Founded in early 2014, Licaifan (LCF) is a P2P platform with a wide focus. In an early advertisement, LCF promoted itself with the slogan “to help small business grow”. A year later, LCF shifted its focus to used car financing in mid-2015. It also started a pilot program to fund student entrepreneurs in colleges. According to its current website, LCF’s core business now includes personal loans to purchase electronics, housing mortgages and auto financing. In April 2016, LCF received a series C Investment and announced a “new strategy” to focus on funding public companies listed in Hong Kong and China’s stock market. It is currently working with 20 partnered public companies and their suppliers, distributors and other affiliates to fund their short-term projects, mostly in financial markets. On the investor side, returns are generally from 10% to 14% and terms vary from 30 days to 1 year. According tohttp://www.licaifan.com/, LCF has nearly RMB 5B of accumulative volume and 31 thousand active investors.
The RMB 330M Series C Investment was led by Yingda Steels, the largest stake holder of listing company Sitaier (SSE: 000760). No further details were disclosed.
P2P platform focused on collateral loans JinBank received RMB 50M Series A Investment
Founded in December 2014, Beijing-based P2P
platform JinBank provides short-term collateral loans to individual and
business borrowers. The platform does not focus on an industry or a specific
borrowing group. As long as a house or automobile collateral is held, any
individual or business entity may borrow from JinBank. According to the annual operating
report on its website
(http://www.jinbank.com.cn/articlelist/60.html), JinBank managed RMB369 in investment in 2015. On the investor side, returns generally vary from 9% to 16% and interest is paid every month.
The leading investor Weizhongxiang Private Equity Management Ltd was founded in 2016 by Junle Wu, former manager of several technology firms. He was able to gather several public companies to join the LP of JinBank’s Series A and believes that this group will provide further funding to JinBank in the future.
P2P platform focused on property collateral mortgages Migang received RMB 60M Pre-A Series Investment
Founded in February 2015, Mifang (www.migang.com) is a P2P platform focused on property-backed personal loans. Migang enables individuals and small business owners to extract cash from property ownerships. The promoters market the loans as “personal asset securitization” which are technically property-backed personal loans. The platform charges borrowers 1% monthly interest and promises to deliver the funds within days. On the investor side, there are 6% return short-term investment and 11% return mid-term (6 to 12 month) products. Occasionally, there are corporate financing projects available when the platform initiates financing projects for one of it’s corporate partners.
There were two investors in the recent RMB 60M Pre-A round: New Margin Capital and a VC under China CITIC Group. No further details was disclosed on the investors.