A First for Asian FinTech: One of the Largest Ever Series B Rounds with Both Public and Private Investors

WeLab, operator of Wolaidai, one of China’s largest mobile lending platforms, and, Hong Kong’s leading online lending platform, announced a US$160 million (RMB 1 billion) fundraising round from a never-seen-before combination of international and domestic Chinese investors (banks and government) led by Khazanah Nasional Berhad. Other investors include ING Bank and state-owned Guangdong Technology Financial Group (GTFG).

The funding round represents the first ever fundraising by a Chinese financial technology firm from both an international bank and government investors, and also one of the first financings by an international financial institution in a leading Chinese FinTech player.

A Forbes article quotes it perfectly to portray how WeLab is working efficiently with the banks to offer the best lending service to the people of China - WeLab lends funds it gets from ‘banks or related financial institutions’ to make below-market-rate loans to consumers in mainland China and Hong Kong who provide it access to some 800 financial data points related to the potential borrower.

This Series B fundraising by WeLab follows the completion of a US$20 million Series A round in January 2015 from a group of strategic and financial investors, including CK Hutchison’s TOM Group and Sequoia Capital. With its Series A funding, WeLab launched new products in mainland China and solidified its credit risk modeling capabilities with big data solutions.

Hong Kong is known to be one of the world’s major financial centers with a wide range of international financial industry giants having their Asian hubs in the city. Barclays, HSBC, Lloyds Bank, RBS, BBVA, UBS, Citi and Wells Fargo represent almost an endless list of international banks that have chosen Hong Kong as an Asian satellite location. As we have already started seeing the trend of banks partnering with FinTech startups and the government’s initiatives to motivate FinTech startups globally, it is not very surprising for LTP analysts to hear this news from the Asia Pacific region as FinTech is roaring loudly there. According to BI, Hong Kong is leading the FinTech adoption market with 29% of the digitally active people in Hong Kong having reported that they have used at least two FinTech services in the last month.

This funding round sets a new benchmark globally with a valuation close to $1 billion, as estimated in the same Forbes story.

This second fundraising is eight times bigger and combines the support of a leading international financial institution and government funds. It is testament to the exciting potential of the WeLab business model and its transformative potential in China’s mobile lending market, said Simon Loong, Founder and CEO of WeLab. Further, the investment is a clear validation of our risk management and operational capabilities, both of which are critical to long-term success in the industry.

A significant portion of the new funds raised will continue to be invested in credit technology research and development, to enable us to set the standard for the mobile lending market and to fulfill young peoples’ appetite of mobile banking, Simon continued.

Government’s Interest:

Khazanah Nasional Berhad is the strategic investment fund of the Government of Malaysia. They undertake strategic investments on behalf of the nation. They have invested in over 70 companies across multiple sectors and industries. In the past, the fund has been investing in different financial services sectors like insurance, banking, Islamic banking, infrastructure financing, insurance, reinsurance as well as the Islamic insurance offerings of takaful and retakaful. The government aims to be by the side of both banks and FinTech startups as long as the combination of their services does better for the nation’s economy and for the the people of its nation.

The investment in WeLab continues to strengthen Khazanah’s presence in the innovation and technology sector internationally. WeLab’s business model is attractive because the company cooperates with financial institutions to provide banking solutions on a purely online and mobile platform, while providing affordable credit to people who are unable to obtain financing through traditional channels, said Khazanah Managing Director, Tan Sri Azman Mokhtar.

International Banks Want To Partner With FinTech Startups:

By now, no one in the FinTech community is surprised when they know that banks want to partner with FinTech startups.

In China, ING Bank offers commercial banking services to corporates and institutions and is one of the largest shareholders of Bank of Beijing. As the bank’s online banking activities are becoming successful globally, it is always looking to innovate in its financial services. The stake we have taken in WeLab and other fintech investments proves that we are determined to transform banking to further improve the customer experience. We will look at the possibilities of starting a partnership with WeLab in ING markets, said ING Bank CEO Ralph Hamers.

LTP analysts already believe that Hong Kong’s FinTech activity will power the Asian financial industry. With the government taking so much interest in the region now, a lot of FinTech activity is expected to be seen in Hong Kong.

With this funding and a vision to democratize finance, WeLab plans to partner with and the Postal Savings Bank of China in 2016 on internet finance initiatives.