China Fintech Roundup

Shanghai China

P2P platform focused on property collateral mortgage Hepan Finance received RMB 66M Series A Investment

HepandaiFounded in 2013, Hepan Finance is a P2P platform focused on providing operating capital to small businesses in the Shanghai area. Prior to launching the lending platform, the company’s experience, and expertise was primarily in value assessment and foreclosure of real estate properties. This experience has transferred to the P2P platform’s ability to confidently control risk and deal with collateral assets after default. On the investor side, the platform offers a 12% return for its 12-month wealth management product, which recently decreased from a 15% return in early 2016. The 1-month short-term product provides a 7.2% return. According to its website, Hepan has managed RMB 2.4 billion in investments and has over 220,000 registered investors.

Hepan’s recent Series A Investment was led by Chinese VC firm ZCZB Capital. According to its website, ZCZB Capital focuses on providing fast, small loans (under RMB 5 million) to startups in a variety of industries. Prior to this injection of funding, Hepan had shrunk in borrowing and only made loans against high-end properties. It was stated that the new funds would be used in recruiting, engineering upgrades and offline promotions.

Online finance marketplace Caogen Investment received RMB 1B Series B Investment from a state-owned fund

Caogen InvestmentFounded in 2013, Caogen Investment is an open lending platform focused on providing operating capital to small businesses. More flexible than other P2P platforms, Caogen accepts property, equipment, material and even products as collateral. The platform now works with suppliers and distributors in over a dozen industries including fishery, furniture, hard rock mining and energy. On the investor side, returns range from 6.5% to 12% with terms ranging from 31 to 365 days. According to its website, Caogen has managed RMB 34 billion and has 6 million registered users.

Caogen aims to be an information intermediary that helps match borrowers with investors. In reality, most borrowers need money urgently and cannot wait until investors purchase the debt online. Caogen’s solution has third-party lenders fund the borrowers first. Although Caogen runs full-scale due diligence reviews on all of its loans, it is the offline lenders that take responsibility for risk control, and they are the ones required to repurchase bad debts from online investors. These offline lenders play multiple roles in Caogen’s model. To the platform, they are loan-originating contractors. To investors, they are third-party guarantors. Caogen is merely an information intermediary and legal/financial advisor.

The RMB 1 billion Series B investment was led by Guangzhou Fund, a sovereign fund managed by the municipal government of Guangzhou. The fund now manages over RMB 100 billion of government funds, private equity, and venture capital. In its press conference, Caogen stated the new funds would be used to develop new business in auto financing, real estate leasing and e-commerce for rural communities.

P2P platform focused on banker’s acceptance-secured business loans received RMB 120M in funding from SOE

YinpiaoBanker’s acceptance (BA) bills are a promise of future payment guaranteed by a bank. These are often traded on the secondary markets. P2P platform relies on BA assets to back online investment products. The platform not only sells BA before maturity but also originates loans secured by BA. Before launching in 2014, the platform’s finance team had over seven years of experience in trading BA and handled over RMB 50 billion each year. On the investor side, the platform provides an average return of 8.8% with terms varying from 7 to 180 days. According to its website, investors purchased 6 billion wealth management from August 2014 to June 2016.

Investing RMB 120 million in, Huayu Economic Development Ltd. is a state-owned corporation that controls 26 companies in nuclear power, munition technology, aerospace, and mining. Aside from the funding, Huayu may introduce to high-quality borrowers from multiple supply chains in the industrial sector.

P2P platform focused on supply chain financing Ziben Online raised RMB 200M in funding from four strategic investors

Ziben OnlineZiben Online (ZO) provides short-term capital to small businesses in certain supply chains. ZO typically works with large corporations by providing loans to their suppliers. For example, if hundreds of small suppliers all sell to a grocery chain, the billing dynamic tends to be unfavorable for the suppliers because the grocery chain can use its negotiating power to delay payment. When struggling to juggle collecting payment with paying expenses, suppliers don’t generally have sufficient credit to be able to borrow from a traditional financial institution. With the buyer’s guarantee, ZO provides short-term loans to help suppliers with operating capital. The financing provides the small suppliers an opportunity to leverage the large buyer’s better credit rating to cash the accounts payable sooner. To buyers, providing the guarantee is not risky and costs nothing more than a simple review of accounts payable and transaction history. To compensate the buyer for their efforts and to encourage them to help their suppliers, ZO pays a service fee. On investor side, there are six wealth management products classified by type of collateral asset:

Collateral Asset Return Term
Banker’s acceptance bill 9.6% to 15% 1 to 6 months
Property 11.6% to 13% 2 to 3 months
Credit (guaranteed by large accredited corporation) 9.6% to 15% 1 to 6 months
Credit (small and short-term) 9.6% to 13% 1 to 3 months
Accounts receivable from large accredited corporation 9.6% to 14% 1 to 4 months
Leased equipment 12% to 15% 12 to 36 months

According to its website, ZO has managed over RMB 21 billion in investments and maintains a total of RMB 10 million in risk reserve funds in several banks.

ZO did not disclose the names of the investors but shared that the RMB 200 million in funds would be used to support small businesses in agriculture.

Spencer Ang LiSpencer Ang Li has served as Fincera’s Vice President of Product since June 2015 and as Chief Executive Officer for Fincera’s multiple product development subsidiaries since March 2014. Prior to joining Fincera, Mr. Li was an Investment Banking Analyst at Cogent Partners in New York, a sell-side advisor for private equity secondary transactions, from 2011 to 2014. During his tenure at Cogent, Mr. Li conducted fund due diligence, managed marketing processes, and participated in the sale and transfer of nearly $2 billion in limited partnership interests on behalf of public pensions, large regional banks, asset managers, and other financial institutions. Mr. Li received a BS in Economics and BA in Psychology from Duke University in 2011.

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