Jingdong Technology Holding Co. Ltd., the fintech arm of Chinese e-commerce giant JD.com, is poised to acquire Home Credit Consumer Finance Co. Ltd., China’s first wholly foreign-owned consumer finance firm, according to sources cited by Caixin.
The acquisition, which awaits approval from the National Financial Regulatory Administration, is backed by the government of Tianjin, where Home Credit is based.
If approved, the deal will secure JD.com a crucial consumer finance license, bolstering its financial services portfolio and allowing it to compete more effectively with rivals like Ant Group Co. Ltd. JD.com already operates in payments, microloans, factoring, and fund sales, but has lacked a consumer finance license. As of June, there were 31 consumer finance companies operating in China.
The financial terms of the acquisition remain undisclosed, and Jingdong Technology has not commented on the deal, Caixin reported.
Established in 2010, Home Credit Consumer Finance was once a prominent player in China’s consumer finance market but has struggled financially in recent years, largely due to its failure to transition to online lending.
The company stopped publishing earnings data after a sharp 88.1% drop in net profit in 2020. Additionally, Home Credit has sold nonperforming loans worth 43 billion yuan ($6 billion) at significant discounts, Caixin sources said.
In response to its financial difficulties, the Tianjin government organized a debt restructuring for Home Credit, which has pledged all its shares in recent years to raise funds.
A 67% stake was pledged to China Foreign Economy and Trade Trust Co. Ltd. in October 2023, while the remaining shares were pledged to Bank of Tianjin in January 2024.
PPF Group NV, the parent company of Home Credit, had been in talks to sell its China unit, according to earlier statements from CEO Jiří Šmejc.
ByteDance Ltd. had also expressed interest in the company but failed to reach an agreement due to disagreements with Tianjin authorities.