$1.44b fund of fund launched in Bei­jing aims to fuel M&As

China Daily (Hong Kong) - - BUSINESS - By HU YUANYUAN huyuanyuan@ chi­nadaily.com.cn

Asia Fin­tech FOF, a 10-bil­lion-yuan ($1.44 bil­lion) fund of fund, was launched in Bei­jing on Tues­day, aim­ing to seek in­vest­ment op­por­tu­ni­ties and fuel merg­ers and ac­qui­si­tions in the fast-grow­ing fi­nan­cial tech­nol­ogy sec­tor.

The fund was ini­ti­ated by both pri­vate and State-owned cap­i­tal, in­clud­ing Hong Konglisted Credit China Fin Tech Hold­ings Ltd, Shang­hai Xin­hua Dis­tri­bu­tion Group Ltd and Jilin Prov­ince In­vest­ment Group Corp Ltd.

“Our in­vest­ment will cen­ter on lead­ing com­pa­nies in the fields of big data, AI, cloud com­put­ing, mo­bile pay­ment, sup­ply chain fi­nanc­ing and block chain,” said Sheng Jia, the ex­ec­u­tive di­rec­tor of Credit China Fin Tech.

Ac­cord­ing to Xie Sha, man­ag­ing part­ner of Asia Fin­tech FOF, the fund al­ready has some projects in the pipe­line, cov­er­ing big-data driven con­sump­tion fi­nanc­ing, block chain in­fra­struc­ture pro­vi­sion and AI-based credit ser­vice plat­forms.

Fin­tech is a bur­geon­ing tech­nol­ogy-backed mod­ern fi­nan­cial ser­vice sec­tor, which mainly in­cludes on­line pay­ment plat­forms, fi­nan­cial soft­ware and data anal­y­sis. This sec­tor saw $49.7 bil­lion of in­vest­ment glob­ally in the past five years, ac­cord­ing to statis­tics from Cit­i­group Inc.

The per­for­mance of the do­mes­tic fin­tech mar­ket is even more eye-catch­ing. Re­search jointly con­ducted by ac­count­ing firm KPMG and US con­sult­ing firm CB In­sights showed that Chi­nese fin­tech com­pa­nies had at­tracted $2.4 bil­lion in in­vest­ment, with nine deals closed in the first quar­ter of 2016, ac­count­ing for nearly half of the to­tal global in­vest­ment in the sec­tor.

Driven by the Chi­nese mar­ket, the Asian fin­tech mar­ket saw $10 bil­lion of in­vest­ment in the first half of 2016, far more than North Amer­ica’s $4.6 bil­lion and Europe’s $1.8 bil­lion.

Pol­icy sup­port is also stim­u­lat­ing the growth of China’s fin­tech mar­ket. In Au­gust, the State Coun­cil pub­lished the na­tional five-year plan on sci­en­tific and tech­no­log­i­cal in­no­va­tion by 2020, in which in­no­va­tion of fin­tech prod­ucts and ser­vices is en­cour­aged.

“Fin­tech is re­shap­ing the fi­nan­cial busi­ness. And this is an op­por­tu­nity that nei­ther tra­di­tional fi­nan­cial in­sti­tutes nor tech­nol­ogy firms want to miss,” said Xie.

The boom­ing in­for­ma­tion tech­nol­ogy in­dus­try, such as smart­phones and e-com­merce, re­quires dig­i­tal fi­nan­cial ser­vices, which also fu­els the growth po­ten­tial of the fin­tech sec­tor. In Oc­to­ber, a sim­i­lar fin­tech FOF val- ued at 30 bil­lion yuan was es­tab­lished in the Zhong­guan­cun area of Bei­jing, which is ex­pected to sup­port ac­qui­si­tions worth 150 to 200 bil­lion yuan.

There are cur­rently seven fin­tech-re­lated ver­ti­cal mar­kets — mo­bile pay­ments and e-wal­lets, sup­ply chain and con­sumer fi­nance, P2P lend­ing plat­forms, on­line fi­nan­cial man­age­ment, on­line in­sur­ances, in­di­vid­ual fi­nan­cial man­age­ment and on­line bro­ker­ages.

Gao Songya contributed to this story.


A China Huarong As­set Man­age­ment Co Ltd booth at a fi­nance fair in Bei­jing.

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