Web-based finance firm eyes expats
Huaxia Finance is China’s first Internet financial services provider to receive foreign direct investment, in the form of $3 million from Cathay Capital Group, the US-based investor, in December, 2015.
For the latter, the investment in Huaxia, approved by the Shanghai municipal government, was its major step into China’s Internet finance sector.
Now, Huaxia Finance has received a certificate that allows it to enlarge its client base by tapping into the expat investors in China, in addition to its current domestic investor pool. “The certificate brings more discipline than immediate benefits as we have to be totally transparent in our business operations, and ready for supervision and monitoring by the government,” said Benny Li, chairman and CEO of Huaxia Finance, which is headquartered in Shanghai.
To be sure, other Internet finance companies in China do have foreign investors, but their investment was not labeled as FDI. Such Internet finance companies are organized through a variable interest entity (VIE) structure, which could encounter regulatory and taxation hindrances in a potential offshore IPO.