Large transactions drive FinTech investment in Hong Kong

Q1 2019 included two of the 10 largest deals in the country since 2014

  • There have already been two funding rounds so far this year that have entered the top 10 deals since 2014.
  • The largest deal so far this quarter was Airwallex’s $100m Series C round, which makes up 53.6% of funding raised in the first quarter of the year. Airwallex’s funding round pushed the company to unicorn status, only three years after its inception. The company offers end-to-end solutions for businesses to move money programmatically at a global scale. Airwallex, which currently has offices in London and San Francisco, among six other countries, is looking to expand further in the US and UK by acquiring other startups.
  • The biggest deal since 2014 is mobile lending platform WeLab’s $220m Series B round, which constituted 46.7% of the total amount invested in that year. WeLab is the most well-funded FinTech startup in Hong Kong raising $425m since 2014. In April this year a wholly owned subsidiary of the company, WeLab virtual bank, was granted a banking license by the Hong Kong Monetary Authority. The neobank is expected to launch in six to nine months.
  • The top 10 FinTech deals in Hong Kong have collectively raised $1.2bn, making up 80.5% of total amount invested since 2014.

The largest deal of the year has contributed on average almost half of annual investment since 2014

  • The total investment in Hong Kong-based FinTech companies reached $186.6m across eight deals in the first quarter of the year, already surpassing half of last year’s total investment. In the five previous years the largest annual deal’s share of total funding has ranged from 29.3% (2014) to 84.3% (2019).
  • The high level of investment is due to the previously mentioned Airwallex’s $100m Series C round and Futu Holdings’ $70m private equity round, which made up 91.1% of funding raised in the first quarter of the year.
  • Futu Holdings is the second most well-funded company in Hong Kong, raising a total of $285.5m across four deals. Chinese multi-national conglomerate investment holding company Tencent participated in three of these four rounds. Futu Holdings, which offers a fully digitized brokerage platform, floated in March of this year with a valuation of $1.7bn.
  • Deal activity started on a high in 2019 with eight transactions, reaching 44.4% of the total number of deals in 2018.

Capital raised by Marketplace Lending and WealthTech companies has contributed over 60% of FinTech funding in Hong Kong since 2014

  • Companies in the Marketplace Lending sector have attracted the most investment, securing more than half a billion since 2014 and making up more than a third of funding across this period. Despite the high levels of capital, deal activity in this subsector was not dominant, making up only 7.5% of total deals. The previously mentioned $425m raised by the Hong Kong’s most-well funded FinTech startup WeLab makes up 80.1% of the total investment attracted by companies in this subsector over the last five years.
  • Funding attracted by WealthTech companies has also been significant in driving the country’s FinTech investment forward, companies in this subsector are responsible for almost a quarter of total funding raised since 2014. Additionally, deal activity in the subsector was more than double that of Marketplace Lending, representing 16.3% of all transactions since 2014.

FinTech investment in Hong Kong was more than three quarters higher than Singapore in the first quarter of the year

  • Despite Singapore-based companies attracting substantially more FinTech investment YoY since 2016, in the first three months of 2019, Hong Kong lead the way. Companies in the country have raised almost $15m more than Singapore-based FinTech companies.
  • The largest transaction in Singapore during Q1 2019 was a $29.4m round raised by Credit Culture. The startup provides digital solutions for personal loans. Another large transaction in Singapore last quarter was $25m raised by CXA Group in March. The health-focused InsurTech has raised over $50m in the last few years and its most recent round had 12 participants including global bank HSBC.
  • On the contrary, deal activity was higher in Singapore in Q1 with 18 deals compared to just eight in Hong Kong.

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. ©2019 FinTech Global

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