FINANCIAL SERVICES | Staff Reporter, Hong Kong

FinTech loan platform WeLab raises US$220 million in funding from Alibaba, IFC

They are looking to extend services beyond the Greater China region.

After amassing 25 million users in Hong Kong and China, mobile lending platform WeLab is looking to extend its services beyond the Greater China region, and it has secured US$220 million in fresh funding to help power its overseas foray.

In November, WeLab raised US$220m of combined Series B+ equity and debt strategic financing, with big-name backers such as Alibaba Hong Kong Entrepreneurs Fund, International Finance Corporation (IFC) and other global banks.

The new round of financing nearly doubles WeLab’s total funding to US$425 million, and the company plans to use to it seek growth in new markets, as well strengthen its operational structure and international partnerships.

WeLab was founded in 2013 and since then has grown to a major loans provider in both HK and China, processing US$28 billion in loans so far, according to a company release. Users only spend three minutes waiting whether their loan is approved, and everything is done online or on mobile with no requirement to meet a human agent. The service is also available 24/7 online instead of being restricted by brick-and-mortar office hours. And the icing on the cake: The FinTech business model means it runs a lean operation, allowing for interest rates to be kept to as low as 1.99%.

“For this round of strategic financing, it was important for us to have participants that would help scale our business to the next level,” said Simon Loong, founder and CEO of WeLab, who leads the more than 500 staff across the company’s offices in Shenzhen and Beijing, China and Hong Kong, as well as in India.

“We have been able to strengthen our cash position, further diversify financing sources and strengthen relationships with leading, global financial organizations. This will underpin our growth story, and see us deliver even greater fintech innovation in the world’s fastest growing market,” he added.

WeLab has developed a business model that targets the gap in financing among the Chinese population with a vision to “Provide affordable credit for 30% of China by 2018.” The World Bank estimates 36% of China’s population aged 15 and above have borrowed money, but only 10% managed to borrow from a financial institution. This is where the mobile lender has broken new ground, providing a tech-powered solution that does not rely on consumers having an established credit history. The result: WeLab’s millions of users and that now avail formal financing and loans in a “more efficient, direct and inclusive way,” the company said.

WeLab said it plans to spend the newly raised funds “to scale its rapidly-growing business and accelerate expansion into new products and geographies beyond Greater China.” But the company has not yet revealed in which markets it will expand, or which products it plans to launch next from the new funding.

Best-in-class technology
The mobile lender also intends to invest in the development of its best-in-class credit technology, which has enabled the company to effectively analyse unstructured mobile big data within seconds and make credit decisions for individual borrowers. The quick results and seamless mobile lending process have been instrumental to its rising popularity.
Meanwhile, banks and telecommunications companies also license the mobile lender’s technology.

The US$220m financing in 2017 follows WeLab’s US$160 million Series B financing in 2016, which was that year’s second-largest fintech Series B in the world, according to a KPMG and CB Insights report. Early backers include CK Hutchison’s TOM Group, Malaysian sovereign wealth fund Khazanah Nasional Berhad, and Sequoia Capital, one of Silicon Valley’s top investment firms.

“We were attracted to WeLab because of its innovative business model,” said Cindy Chow, executive director of Alibaba Hong Kong Entrepreneurs Fund. “As one of the fastest growing fintech companies in Hong Kong and the Mainland, we look forward to working with the team and support their further expansion.”

“WeLab has established itself as an exceptional, technology-driven fintech company driven by its professional management team, innovative products and best-in-class technology. Credit Suisse is committed to serving the diverse financing needs of entrepreneurs and we are proud to play a role in
helping WeLab access the capital needed to fund its continued growth,” said Mervyn Chow, Greater China CEO and co-head of investment banking & capital markets, Asia Pacific for Credit Suisse, which is participating in the strategic financing and acting as placement agent.

“WeLab has demonstrated its ability to effectively make credit decisions based on non-traditional, but otherwise reliable data, for millions of Chinese borrowers without prior credit history,” said Andi Dervishi, FinTech Investment Group Head of IFC, a member of the World Bank Group. “We believe the firm’s strategic partnership with banks will result in a sustainable competitive advantage to the company. Similarly, consumers will benefit from improved access to credit and from building a credit history, an important step towards financial inclusion.”

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