LexinFintech Files for US IPO

LexinFintech has filed for an IPO on the NASDAQ, planning to raise US$500 million.

The company operates Fenqile, an online retail installment seller (a major competitor of Qudian), Juzi Licai, an online investment platform, and Dingsheng Zichan, which matches customer loans with investors including individual investors on Juzi Licai and institutional investors, such as peer-to-peer lending platforms, commercial banks and other financial institutions. Its funding sources include its own direct lending programs and asset-backed securities (ABS), according to the company.

The company’s targeted customers are educated young adults. It claims over 6.5 million customers with an approved credit line and over 20 million registered users as of September 2017. Active customers were 3 million in 2016 and 3.3 million in the nine months ended September 2017.

It acquires customers online through social referral and cash rewards campaigns and offline by issuing co-branded credit cards with commercial banks. The acquisition cost per customer was 114 yuan, 127 yuan (US$19) and 105 yuan (US$16) in 2015, 2016 and the first nine months of 2017, respectively.

Hawkeye is the company’s in-house developed automated credit assessment and underwriting system that utilizes 5,000 potential data variables and it has developed more than 1,000 decisioning rules. 95% of all loan applications can be assessed and approved automatically within seconds on average, according to the company.

The company’s revenues are from item sales and installment loans. Its financial services income more than doubled year-over-year in the first nine months this year, though the direct sales revenue decreased. It managed to turn a profit in the first nine months of this year.

Source: LexinFintech
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China Fintech Newsletter – Nov. 6-13

Ant Financial & Alibaba

Alipay processed a total of 1.48 billion payment transactions on November 11th, Alibaba’s annual shopping day, up 41% from last year, with 256,000 transactions per second at peak.

Total mobile GMV settled through Alipay was 90% of the total (US$25.3 billion), compared to 82% last year.

A total of 860 million consumer insurance policies were sold during the day.


Ant Cash Now (借呗), a small loan product available for Alipay users, issued 23.97 billion yuan (US$3.6 billion) ABS (asset-backed securities) in October.

Ant Cash Now and Ant Check Later (花呗), a line of credit for Alipay users, had each issued more than RMB100 billion (US$15 billion) ABS in the first ten months of this year. (Source)


Ant Financial and healthcare tech startup Linking Cloud co-developed a credit option for hospital visits.

Alipay users with a Zhima Credit Score above 650 can get a 1000 yuan (US$150) loan before making a hospital visit. Their accounts of Ant Check Later (revolving account) will automatically be charged afterward. (Source)

Ant Financial began to offer credit options for hospital bills in February 2016, according to Zhima Credit.


Ele.me, a leading food delivery service affiliated to Alibaba, has recently added a short-term micro-loan product. Users can take out loans from 500 yuan (US$75) to 2000 yuan (US$300) and choose to pay off in 7 or 14 days. (Source)


JD Finance

Online retailer JD launches a mobile app for the direct bank it co-established with a local bank, Bank of Dalian. The current offerings on the app, called Yibanke (壹伴客), include Liandabao (连大宝), a money market fund, and Lianxintou (连心投), a peer-to-peer financing platform. It plans to roll out a wide range of offerings including lending and investment products platforms, and robo-advisors. (Source)


JD launches its financial cloud platform that offers various solutions ranging from risk management systems to marketing services.


Tencent

Tencent’s financial cloud business has reached a deal with China Merchants Bank that the latter would adopt its AI-based fraud prevention technology. (Source)


Funding & Others

WeLab, a Hong Kong-based mobile lending startup, has raised US$220 million in a new round of equity and debt financing from Alibaba Hong Kong Entrepreneurs Fund, China Construction Bank (International), Credit Suisse and International Finance Corporation. The raise brings it to US$425 million in total funding.

The company uses unstructured mobile data and its own proprietary system for credit decisioning. WeLab also licenses its technology to banks and telcos.

WeLab operates Wolaidai (我来贷)in mainland China and WeLend in Hong Kong. Founded in 2013, the company claims it has signed up a total of 25 million users and processed US$28 billion in total loan originations.


Online marketplace lender PPDAI raised US$221 million in a downsized IPO. — Bloomberg


Online car sales and financing platform Yixin has set price range to raise up to US$900 million in Hong Kong IPO. — Caixin report


Qudian reports 308% YoY increase in total revenue and 260% increase in operating income for the third quarter. Financing income increased 214% YoY and sales commission fee increased almost 15 times.

Active borrowers increased to 7.5 million from 2.7 million a year ago.


China Rapid Finance reported Q317 earnings. Total loan volume and the total number of loans increased 250% and 490% YoY, respectively. Total fees billed and net revenue increased 62% and 125% YoY, respectively. Net loss increased 11% YoY. The company expects to turn a profit in the fourth quarter.

China Fintech Newsletter – Oct.30 – Nov.5

Tencent’s WeChat begins selling insurance through WeSure, an insurance broker in which a subsidiary of Tencent holds a 57.8% stake. Incorporated in October 2016, WeSure only received regulatory approval at the end of September.

Currently only a health insurance plan provided by Taikang, one of the four insurers that hold an online-only insurance license, available on WeChat and only 1% of WeChat users can access it. WeChat reported over 963 million monthly active users in the three months to June.

Tencent has made a few other investments in online insurance. A subsidiary of Tencent holds a 15% stake in Hetai Life Insurance, an online-only insurer established in January 2017. British insurer Aviva announced in January this year to establish a digital insurer in Hong Kong together with Tencent.

Tencent co-established ZhongAn Online P&C Insurance, the leading online-only insurance company in China, together with e-commerce giant Alibaba and Ping An, a leading insurance company, in 2013. ZhongAn was the first to obtain an online insurance license.


The total volume of loan originations through Chinese online peer-to-peer lenders has declined for three consecutive months to RMB218.4 billion in October, according to WDZJ, a local media outlet focused on online lending. WDZJ believes it’s due to the long National Day holiday and the recent regulatory crackdown on online finance.

The total loan balances reached RMB1.17 trillion as of October, a 71% year-over-year increase. The total number of online lending platforms decreased 8% year-over-year to 1975, according to WDZJ data.


Yixin Group, which operates an online car sales site and also provides auto financing options, has submitted IPO application to the Hong Kong Stock Exchange.

Facilitating both new and used car sales, the site offers a variety of financing options, including straightforward car loans, installment plans and leasing, and auto insurance.

Yixin Group is a subsidiary of BitAuto (NYSE:BITA), or Yiche.com, an online portal for car information and listings. Investors in Yixin Group include three Chinese tech giants, Tencent, JD and Baidu. Its website and mobile apps have combined 50 million monthly active users, according to the company.


ZhongAn Online P&C Insurance, the leading online-only insurer, unveils ZhongAn Information Technology Service Co., Ltd. (ZhongAn Technology), a wholly-owned subsidiary that provides business-facing tech solutions for finance and healthcare industries. It has launched a variety of services based on technologies such as blockchain, cloud computing, big data and artificial intelligence.


Facial recognition tech developer Megvii, a.k.a. Face++, has raised US$460 million in Series C round of funding led by a state-owned venture capital fund and joined by Ant Financial (Alibaba’s finance arm), Foxconn Group, and a few other investors. (Source)

Its technology is powering Alipay, the leading online payment service under Ant Financial. Other customers of Face++ include smart device maker Xiaomi and Lenovo. More than 50,000 developers have adopted its technologies.


JD Finance, the finance arm of online retailer JD.com, unveils Jingdong Chaonao ( “Super Brain”), a facial recognition system. It has been implemented in JD Finance’s mobile app that supports facial recognition payments at physical shops. (Source)


JoinQuant, a quantitative trading platform, has received Series B funding from WisdoMont. (Source)


Online marketplace lender PPDAI has set IPO price range to raise up to US$298 million. The company plans to list on the NYSE.


Consumer lender Hexindai debuted IPO on the NASDAQ.

China Fintech Newsletter – Oct.23-29

Shouqian Ma (“money collection code”), the QR code payment service for small physical stores or individuals of Ant Financial, have signed up 33 million customers in the eight months since its launch in February.

While previously businesses too small to justify barcode/QR code scanning devices had to use their personal Alipay accounts that charge fees for withdrawals above a certain amount, Shouqian Ma doesn’t charge a fee until March 2021.

Ant Financial announced last week plans to extend 1 trillion yuan of loans to Shouqian Ma customers over the next three years. The service extends business loans through MyBank, the online direct bank affiliated to Ant Financial, and Net 30 credit for orders on 1688.com, the online wholesale marketplace of Alibaba. The more payments they collect through Alipay the better terms they can get, according to Ant Financial. (Source in CN)

Other services available for Shouqian Ma customers include Ant Check Later, a line of credit for Alipay payment users, and Yulibao (or Yunshangbao), a money market fund. More recently it added a sales data analytics service.


Tianhong Yu’ebao Money Market Fund saw third-quarter growth in assets under management declined to 9%, compared with 40% and 25% in the previous two quarters, respectively, and 96% in the same quarter last year. (Document in CN)

The slowed growth in the last two quarters is believed to be mainly due to the lowering of the investment cap. The fund lowered the cap from one million yuan to 250,000 yuan in May and further to 100,000 yuan in August, reportedly due to regulatory pressures. Another cause may be the addition of a new channel for third-party investment products on Yu’ebao homepage in June.

The fund’s assets reached 1.56 trillion yuan as of the end of the quarter, with bank deposits, bonds and reverse repos accounting for 87.1%, 7.9%, and 4.9%, respectively. The total income generated in the quarter was 15.3 billion yuan.


Yulibao, or Yunshangbao, another money fund managed by Tianhong that’s only available for business customers of Ant Financial, increased over 100% quarter-over-quarter in assets to 104.5 billion yuan at the end of the third quarter, with 780 million yuan in total income. (Document in CN)


The total transaction volume of consumer loans through online marketplace lending platforms in September was estimated to be 36 billion yuan, accounting for 15% of the total online consumer lending volume, according to estimations by 01Caijing, a local finance news outlet.

Top 20 sites have a combined 50% market share. The top five platforms measured by consumer loan volume are PPDAI, Yirendai, PPmoney, Hengyirong and Jimu. (Source)

An earlier report by WDZJ, a media outlet focused on online lending, estimated the total volume of online consumer lending in September was 30 billion yuan, accounting for 13% of the total online lending volume. WDZJ estimated the total number of online lending sites that offered consumer credit was 258, accounting for 13% of the total. The top five in terms of transaction volume, according to WDZJ data, are PPDAI, 51RP, Xiaoying, PPmoney and Niwodai. (Source)


The total number of online auto financing platforms decreased to 541 in September, down from 769 a year ago, according to 01Caijing. (Source)

There were a total of 76 online lenders focused on agriculture lending in September, accounting for 5% of the total online lenders (1554). (Source)


Didi, the leading ride-hailing service, and Ant Financial acquired 3.14% and 16.15%, respectively, of payment technology company Gaoyang Jiexun (19Pay) at a valuation of 820.3 million yuan.

Online Marketing Firm iClick Files for US IPO

image credit: iClick

iClick Interactive Asia Group, China-based online marketing solutions and services provider, has filed plans for IPO.

The company provides marketers with a self-service system and managed services through an account management team. It claims its consumer data-based marketing solutions “analyzed approximately 665.4 million active profiled users with 19 attributes on average for each such profile” in the 30 days leading up to August 31, 2017.

Data are collected from channels including its own proprietary tracking tools, marketers, publishers, ad exchanges, and other third-party partners. “These user profiles, which are updated and refined on a continuous basis, typically include information on a user’s attributes, such as his or her demographics, geographic location, device preference, spending history, personal interest and other online or offline behavioral pattern”, according to its filing.

iClick covered approximately 74,000 mobile apps and 2.3 million websites in the 30 days leading up to August 31, 2017.

Gross billing from mobile audience solutions represented 23.2%, 47.6% and 60.9% of its total gross billing in 2015, 2016 and the six months of 2017, respectively.

The gross billing from direct marketer clients as a percentage was over 70% and 60% of the total in the two years prior to 2017 and in the six months of 2017, respectively, with the rest from marketing agency clients.

Its revenues are primarily from clients’ marketing spend with their marketing services and a minority from incentives from the publisher under its sales agency arrangement. The company generated US$65 million, US$95 million and US$55.7 million in net revenues, with a net loss of US$39.7 million, US$27 million and US$22 million, in 2015, 2016 and the first half of 2017, respectively.

Chinese Consumer Lender Hexindai Files Plans for US IPO

Chinese consumer lending firm Hexindai Inc. has filed for a US IPO to raise up to US$80 million.

Hexindai.com, targeting at the relatively well-off, extends medium-sized loans ranging from RMB20,000 to RMB140,000. 80% of the total transaction volume from March 2016 to June 2017 fell in this range.

Though positioned as an online lender, it’s been primarily dependent on the lending chain of Hexin Group, majority-owned by the founder and CEO of Hexindai Inc., for customer acquisition. Over 90% of the borrowers of Hexindai.com had been referred from the physical branches of Hexin Group as of June 2017 since its inception in March 2014, according to the filing. Hexin Group claims to have 144 branches in 103 Chinese cities as of June 2017.

Hexindai Inc. doesn’t pay any fees to Hexin Group for such referrals, but borrowers acquired by the latter pay both separately.

As of June 2017, it had had 110,156 investors and 56,230 borrowers on its platform.

Source: Hexindai Inc.
Source: Hexindai Inc.

 

Chinese Finance Search Platform Jianpu (Rong360) Files for US IPO

Jianpu Technology, the directory and search service of online finance company Rong360has filed a US IPO of up to US$200 million.

Jianpu operates an online platform where users can search for financial products, compare terms and conditions, and apply for loans or purchase personal investment products. Research results of loans or credit cards are not only based on the user’s needs but also his or her credit profile, according to its filing.

It also provides users a credit management tool and educational content. Jianpu claimed to have 63.6 million monthly active users in the first half of 2017, up from 34.8 million a year ago.

More than two thousand financial products providers, including both conventional financial institutions and the newly emerged digital finance companies, listed more than 100,000 products on Jianpu platform as of June 2017.

Apart from helping them acquire customers, Jianpu also offers third-party businesses custom data, big data-based risk management solutions, and other related services.

The company’s revenues are primarily generated from referral fees from loan products (on a cost-per-action basis) and credit cards (on a cost-per-success basis). Other revenue sources include display and performance-based marketing and risk management solutions.

Source: Jianpu Technology

Source: Jianpu Technology

The company hasn’t turned a profit yet. It recorded an operating loss of US$6.5 million on revenue of US$58 million in the first half of 2017.

Incorporated in 2011, the company launched the loan search service in 2012, credit card section in 2013, wealth management products section in 2014, big data risk management solutions in 2015 and Gold Cloud, the online transaction system, in 2016. Jianpu is a newly established subsidiary of Rong360 which also operates an online consumer lending platform. The credit offerings provided by Rong360 are also available on Jianpu. Jianpu will continue to be run under the “Rong360” brand.