How a leading Chinese P2P ventures overseas

There seems to be another round of P2P collapses happening in China now (see our previous analysis of the reasons for the first round). Again, speculations are P2P as an industry might collapse any time.

While that speculation is unlikely to happen, many leading P2P players are finding ways to keep their growth, by venturing overseas. While it is certainly not an easy path to take, some of them have already built up a number of investments/subsidiaries overseas.

Finup is one of them.

A flexible player

Finup started in 2013, offline, and providing consumer loan matching. Its P2P platform was launched in 2014 and cash loan product in 2015. In 2016, it ventured into consumer installment and in 2017 it started the car financing platform.

In 2018, it accelerated its investment in Southeast Asia.

It is clear that Finup as a company has a deep awareness of the macro environment and its challenges. It has always been looking for new businesses to diversify.

In April 2018, Finup submitted its IPO prospectus to the Hong Kong Stock Exchange. In the document, it listed revenue of CNY 4.2 billion (US$6.25 billion) in 2017, with adjusted earnings of CNY1.19 billion (US$117 million).

It had a workforce of 12,399 at the end of 2017, including 9651 offline promotional and service personnel, or 77.8% of the workforce.

However, despite good earnings, its IPO failed. People believed that this failure was related to compliance issues it was facing in China. In February 2017, it indeed received warnings from the government to change a number of business practices.

Overseas investments

Since 2017, Finup has been investing outside China. Zhang Hui, its Chairman, once mentioned that they had explored three ways: setting up subsidiaries, investing in or acquiring local companies, and through local partners.

After some assessment about Southeast Asia, Zhang believed that because of the market complexity, the second approach (i.e. investing) makes more sense.

That’s pretty much how it did:

1、Investing in Akulaku

Akulaku is one of the earlier Chinese fintech players in Southeast Asia. It started in 2016 focusing on remittance of Filipino domestic workers in Hong Kong. The company then pivoted to ecommerce installment through its own platform, and via credit.

In 2018, Finup led the C round for Akulaku, with a reported investment amount of US$70 million. Sequoia India, BlueSky Venture Capital, and Qiming VC participated.

In early 2019, Akulaku announced a new round of financing led by Ant Financial. Finup might have already exited at this round.

2、Investing in Tiki.vn

In January 2018, Finup and JD.com led C round investment of Vietnamese ecommerce platform Tiki.vn.

Tiki.vn started in 2010 with its headquarters in Ho Chi Minh City. In its early days, it sold electronic books, but later on, it ventured into other categories.

Zhang Hui mentioned that Finup will work closely with Tiki in the area of consumer financing – one of the important dimensions of ecommerce ecosystem.

Tiki is raising a new round, reported to be US$75 million and led by NorthStar group.

3、Investing in SlicePay

In September 2018, SlicePay, a consumer loan company focusing on students and young professionals, received series A funding from Finup. The amount is said to be US$15 million.

SlicePay hoped to roll out virtual credit cards to its demographic after this round of funding.

4、Through Singapore-based Cashwagon

In March 2018, Finup signed a strategic collaboration agreement with Cashwagon, a Singapore based cash loan company. Finup pledged to help Cashwagon on data processing as well as market expansion across Southeast Asia.

Cashwagon’s founder hails from Eastern Europe, and the company has operations in PH, VN, KH, and LK. The collaboration allows Finup to expand its asset base to these countries.

It is believed that among these markets Sri Lanka is the most successful one for Finup. With a GDP per capita higher than that of Indonesia, Sri Lanka however has a much smaller population,  at around 20 million.

5、Own venture in SG

Aside from that, Finup also started a fintech venture in Singapore during the heyday of blockchain craze. It hired a number of industry experts for the venture to conduct trials in various aspects of fintech, including blockchain. However, these trials did not go well and most of the team left before year-end.

Aside from Finup, many other Chinese P2P companies are also expanding overseas. It is not an easy journey, but for many, it is a necessary one.

Ultimately for many of these markets, consumer fintech is still in its infancy.