Caixin
Nov 18, 2016 05:20 PM
BUSINESS & TECH

China's Fintech Investment Soars 67% Despite Global Fall

(Hong Kong) — Investment in financial technology companies in China soared in the third quarter, while political uncertainties in other parts of the world had investors taking a more cautious approach, a KPMG report shows.

More than $1 billion poured into venture-capital-backed fintech companies in China through 12 investment projects in the third quarter, up 67% from the previous three months, according to a report released on Thursday that was jointly published by the audit firm and CB Insights, a venture capital database.

Among the top deals in the third quarter, Beijing Happy Times Technology Development Co. — a startup backed by Ant Financial that launched a loan product that allows college students to shop online and pay off the purchases in instalments — raised $449 million in its sixth round of fundraising. Meanwhile, 51Xinyongka, a mobile application run by a Hangzhou-based technology firm that helps users manage credit cards and invest in wealth management products, raised $310 million in its third round of financing.

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China-based fintech companies have done especially well over the past year, with "unicorns" — startup firms valued at over $1 billion — such as Ant Financial, JD Finance and Lufax continuing to grow and attract investment both domestically and globally, at a time when "China has embraced a shift toward using mobile to make small transactions, with many retailers not accepting cash at all," the report said.

In contrast to the growth momentum in the fintech industry in China, uncertainties cast by Brexit and the U.S. presidential election have caused investors to slow capital deployment in other parts of the world.

The KPMG report shows that around the world, venture-capital-backed fintech companies raised $2.4 billion in the third quarter, a drop of 17.2% from the previous quarter, and the second consecutive plunge from $4.9 billion in the first three months this year.

Lufax Chairman and CEO Gregory Gibb said in a recent exclusive interview with Caixin that the internet finance sector in China would further integrate, and the top five fintech companies would likely take up a market share of 75% to 80% in the next three years.

Contact reporter Dong Tongjian (tongjiandong@caixin.com); Kerry Nelson (kerry@caixin.com)

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