Khazanah, ING bet on fintech startup WeLab

The Hong Kong-based internet startup, which has backing from Li Ka-shing, plans to expand its lending business to rural areas of China.
Simon Loong, founder and chief executive of WeLab.
Simon Loong, founder and chief executive of WeLab.

WeLab Holdings, a Hong Kong-based fintech startup, said on Wednesday that it has raised $160 million from new investors, including Malaysian sovereign wealth fund Khazanah and Dutch financial services group ING.

The company said in a statement that Guangdong Technology Financial Group, a Chinese state-owned fund in Guangdong province, also participated in the second round of financing.

When pressed over the telephone, though, Simon Loong, founder and chief executive officer of WeLab, declined to provide a detailed breakdown of the stake sales or an updated valuation of the company. 

WeLab, which offers small personal loans to college students in China, will use the funds to expand into rural areas and hold off any potential takeover attempts by rivals, given the increasingly competitive nature of Chinese lending.

Loong told FinanceAsia that the extra capital will be deployed to improve its technology infrastructure and mobile analysis, allowing the two-year-old startup to offer mobile-friendly services to China's rural residents.

However, Loong, a former commercial banker with 15 years of experience at Standard Chartered and Citi, declined to provide further details.

WeLab has typically offered loans of between Rmb3,000 and Rmb5,000 to college students and young workers in more urbanised, coastal areas in China, with interest rates of 10 to 20% over a 6- to 12-month period. So its push into the countryside is a change of tact. 

WeLab raised $20 million from its Series-A round of funding in January 2015 from a group of investors that included US venture capital firm Sequoia Capital and Hong Kong tycoon Li Ka-shing’s TOM Group, a Hong Kong-listed media company with an e-commerce joint venture with state-owned China Post Group. The latter is the parent company of Postal Savings Bank of China, which has about 500 million clients and more than 40,000 outlets across the country and is preparing for a $10 billion initial public offering later this year.

In its statement, WeLab added that it had started a partnership with and the Postal Savings Bank of China on a number of internet finance initiatives., an e-commerce joint venture between TOM and China Post, is a Chinese online-to-offline retail portal that sells products ranging from Apple’s latest iPhone to milk powder. WeLab and TOM have previously invested in Rubikloud Technologies Inc., a Canadian technology firm specialising in retail intelligence.


WeLab's second private offering of shares shows how large institutional investors are willing to pour money into businesses seeking to disrupt traditional banking models in China. The high amounts of capital being raised shows no let-up despite sky-high valuations and the poor performance of fintech IPOs in the US.

China’s group buying and food delivery site Meituan-Dianping raised a jaw-dropping $3.3 billion from private investors on Tuesday, valuing the Chinese startup at more than $18 billion. 

Bankers said the fundraising landscape for China's technology startups remains solid as investors are still positive about the growth outlook, despite a lack of profitability.

"It is a zero-sum game," one senior technology banker at a US investment bank in Hong Kong said. "You have to spend lots of money to be the number one in each category from travel site to payment services."

Meituan-Dianping, which was formed by the merger of two rivals last year, secured backing from Tencent, venture capital firm DST, and Singapore’s sovereign wealth fund Temasek.

Founded in 2010, Meituan raised $4.37 billion in five private rounds, while Dianping raised $1.39 billion in 12 fundraisings since it was founded in 2003. However, both firms are still struggling to make a profit in the big and competitive online-to-offline market.

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