China Rapid Finance Limited (NYSE: XRF), an established Chinese Fintech firm, revealed on December 24 that True North Financial, LLC has invested $8 million in a private transaction for unregistered shares of the Rapid Finance’s company stock.
Shares in China Rapid Finance jumped on the news trading significantly higher than its pre-holiday close. At one point today China Rapid Finance hit $6 a share more than double its close on Tuesday.
TNF reportedly acquired 37,985,203 Class A unregistered Ordinary shares, and 3,465,574 Class B unregistered Ordinary shares, “based on the closing price on December 23, 2019, which was $1.93 per ADS (or $0.193 per ordinary share).”
The Class B ordinary shares are “entitled to 10 votes per share.”
Following the completion of this transaction, TNF owns 36.63% of the total outstanding share capital of China Rapid Finance Limited and 36.63% of the company’s voting power. Rapid Finance has “not yet granted TNF any rights to require the company to register these private equity securities,” according to a release.
The agreement provides that in the next 30 days, China Rapid Finance and TNF will “endeavor to agree, on terms to be acceptable to both parties, to registration rights with respect to the Class A Ordinary shares.”
As mentioned in the release, “as consideration for the share purchase, TNF delivered to China Rapid Finance a promissory note in the amount of $8.0 million, that is payable in full on January 13, 2020.”
The announcement further noted that, as part of the transaction, TNF has been granted the right to appoint “up to 2 qualified directors to the board, subject to ratification by the shareholders.”
China Rapid Finance was previously best known as a marketplace lending platform. In recent years, the Chinese P2P lending market has dramatically changed as the regulatory environment has shifted causing many platforms to exit the sector or pivot away from P2P loans. The company has endured a rocky period with its listing on the NYSE coming into question.
Today, China Rapid Finance describes itself as an established Fintech company that provides decisioning technology and marketing services, which aim to cater to China’s growing consumer credit industry.
China Rapid Finance is currently developing various strategic alternatives and new business opportunities in financial technology, marketing services and portfolio management.