Former Unicorn China Rapid Finance Goes Public at a $350M Valuation

Two weeks ago I wrote about China Rapid Finance and their plans to go public. I shared information about their target borrowers which they call the Emerging Middle Class Mobile Active (EMMA for short) and also dug into some interesting data points from their filing with the SEC. On April 28th, 2017 China Rapid Finance officially went public, becoming the second Chinese online lender to do so in the United States. The first company was Yirendai back in December 2015.

The IPO price was set at $6.00 and the company raised $60 million which was adjusted down from their anticipated raise of $105 million. Back in 2015, it was reported that the company had a pre-money valuation of $1 billion after closing a $35 million Series C. The company is now valued at $350 million.

It trades under ticker XRF on the NYSE. At time of writing shares were trading around $7.10 per share. Below is the stock chart from Google Finance over the last three days.

Click for larger view.

The fact that China Rapid Finance and Yirendai before them chose to go public in the US is significant. In a recent Lend Academy podcast with Yirendai CEO Yihan Fang, she stated that they felt the US was more educated on marketplace lending. This coupled with the fact that Ning Tang (Founder of parent company CreditEase) and other management members had experience in the US and were more comfortable with the US capital markets led to their decision to list in the US.

Yirendai has done well since their IPO while the US listed companies Lending Club and OnDeck have continued to struggle into 2017. Now that a second Chinese lender has gone public in the US it solidifies the importance of the US to China. Here at Lend Academy we think the opposite is also true. China and the US are the two largest economies in the world and we think it is inevitable and appropriate that these two countries should have ever closer ties when it comes to fintech.

What’s going to be interesting going forward is whether China Rapid Finance’s IPO will open up the floodgates for other fintechs to list in the US even though many firms may need to do a down round in terms if valuation due to the private-public markets valuation divide. We’ve known for quite some time that Lufax has been eyeing an IPO in Hong Kong which was postponed from last year. They would be the first peer to peer lender to list there. Many other firms though may now look to IPO in the US such as Dianrong. Their CEO Soul Htite said last year to the South China Morning Post:

In New York you get a very good valuation, but the story of Dianrong is China, so it might be better to list in Hong Kong.

Another company that could seek a US IPO is Ppdai.com who last year said it could go public in the first half of 2017.

Conclusion

Not surprisingly there has been little news as of late on any US marketplace lenders who intend to go public, but there is clearly interest in Chinese firms. After a calm 2016 it’s great to see things pick back up and it’s going to be interesting to see what the remainder of 2017 has to bring.

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