China Rapid Finance Hopes Its U.S. IPO Will Grow Chinese Customers

  • Grace Noto
  • May 1, 2017
  • 1

As only the second Chinese online lender to go public in the U.S. (first was Yirendai in 2015), China Rapid Finance is confident its new listing on the New York Stock Exchange will lead to growth.

The company, a consumer credit marketplace in China, focuses on providing credit access to what it calls “EMMAs”—“emerging middle-class, mobile-active” consumers—in the country. It listed on the NYSE Friday, April 28th, returning today to ring the opening bell.

This sector of customers in China is about 500 million large as of 2015, according to the company, and is often underserved by traditional banks in the country, said Zane Wang, CEO of China Rapid Finance.

“Consumer credit covers pretty much the entire population in the U.S.—about 60% of the U.S. population has access [to credit products],” Wang told Bank Innovation. “In China, banks are limited by the interest they can charge, the amount of data they have.”

According to Wang, these limitations mean banks in China can typically serve prime customers but “don’t really know” or cannot serve the near-prime customers that comprise the EMMA population in the country.

Based in Shanghai, China Rapid Finance was founded in 2001, and has since made $15 million in loans for 2 million borrowers in the country. The company’s focus on EMMAs– customers that are often well-educated and well-employed, but lack credit histories– makes them unique in the region.

The online lender offers two types of loans to customers to build up credit history. The first is “consumption loans,” or those used for consumer purchases, set between $72 to $865. The second type of loans the company offers is typically used for larger purchases, like education or healthcare funding, and is set between $865 to $14,400.

According to the company, the average EMMA borrows about 10 times per year. “We are building long-term, repeatable customer relationships,” Wang said.

Being listed on a U.S. stock exchange, Wang said, will lead to larger-scale borrower acquisition for the company in China, and will help grow its portfolio. For now, the company is not considering a U.S. expansion, and is focusing on Chinese borrowers.

Right now, the company’s stock—trading under XRF—is up about 17% from its original price of $6.00 per share. It is currently trading at $7.45 according to NYSE data.

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