FinTech investment in China is up almost 10-fold already compared to last year
- More than $37.5bn was raised by FinTech companies in China between 2014 and the first half of 2018, across 309 transactions.
- Investment hit $12bn in 2016 with 73 deals closed that year and five transactions valued above $500m. JD Finance, an online consumer credit provider, raised $1bn funding from Harvest Global Investments, China Taiping Insurance and Sequoia Capital in Q1. This was the largest private equity funded FinTech deal in China that year.
- Funding in 2017 slumped below $2bn, as the threat of stricter regulations deterred investment in larger transactions.
- Investment in China jumped 10-fold from the previous year, reaching almost $20bn in H1 2018. Funding has already set a record this year, mainly driven by the $14bn Series C funding that Ant Financial received in June 2018. Funding will be used to accelerate Ant Financial global expansion plans of its payment service Alipay, which currently serves approximately 870 million annual active users globally and 520 million users in China.
Funding in Q2 2018 sets a record, with over $17bn raised
- Investment in Chinese FinTech companies rebounded in 2018 from subdued levels in 2017, as a stricter regulatory environment, increased scrutiny of FinTech companies and their links to capital outflow, as well as concerns over ICOs deterred investment last year.
- Funding in Q2 2018 set a record with $17.1bn raised across 21 transactions, mainly driven by the previously mentioned $14bn funding that Ant Financial deal. When excluding the investment that Ant Financial received, Q2 2018 funding was still 57.9% higher than the full year of 2017.
- The future for FinTech funding in China looks strong, given the increasing technology adoption rates and the scope for growth from serving the large underbanked population in the country. Ping An, the country largest insurer, is also earmarking $15.8bn for FinTech investments over the next decade.
Over $17.3bn was raised in the top 10 FinTech deals in China in the first half of the year
- Just over $17.3bn was raised in the top 10 deals in China in H1 2018, equal to 94.3% of the total capital invested in FinTech companies in the country this year.
- Many banks in China have been increasing their focus on digitisation and developing transformation strategies, offering opportunities for B2B-focused FinTechs to enable banking transformation.
- OneConnect, a financial technology platform provider for smaller banks and a subsidiary of Ping An, raised $650m in series A funding in February 2018. This funding, led by IDG Capital and SBI Group, valued the company at $7.4bn in preparation for a $2bn IPO.
- CGTZ, a Hangzhou-based online lending platform, raised $359.3m in a Series D round led by Geo-Jade Petroleum. The company plans to use this and future funding to focus on extending its services to providing rural financing solution in China.
Nearly half of the FinTech deals in China this year have been above $100m
- The proportion of sub $25m deals fell from three quarters of deals in 2014 to just over half last year, dropping even further to 29.6% in H1 2018.
- China implemented measures to manage outbound payments and investments in 2017 to shore up its foreign-exchange reserves. The share of transactions valued between $50m and $100m dropped from 20.6% to 10.2%, as investors held back due to tightened capital controls and the uncertainty of increased regulation of the FinTech industry by the Peoples Bank of China. However, currency controls were relaxed towards the end of 2017 in a concerted effort to clamp down on capital flight.
- Nearly half of the FinTech deals in China in the first half of the year were valued above $100m, as the country FinTech ecosystem shows continued signs of maturity. Hyperchain Technologies, a blockchain platform developer, raised a $234.2m Series B round in Q2 2018. This funding was led by Xinhu Zhongbao and China Gaoxin Investment Group Corp, and is the largest Blockchain deal completed in China in the first half of 2018.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2018 FinTech Global
