An Alibaba-backed fintech company founded by a 34-year-old just had an amazing IPO

  • Qudian, an online small credit provider, went public on the New York Stock Exchange.
  • The company, which was founded by 34-year-old Min Luo, is going after a market it says China’s biggest banks can’t serve.

Qudian, an online small credit provider, popped more than 43% after going public on the New York Stock Exchange Wednesday morning, opening at $US24 per share.

The China-based company, which was founded by 34-year-old Min Luo, targets China’s younger and underserved markets with small loans via its mobile app. Qudian, according to a press release, “facilitated $US5.6 billion in transactions” to 7 million customers in the first half of the year.

The stock jumped to a high of $US34 per share Wednesday morning before falling back to $US30 at the time of publication.

Qudian, according to its prospectus, offered 37.5 million shares. Reuters reported the company raised $US900 million from the IPO, making it one of the largest Chinese companies to list its shares on an American exchange this year.

The company counts Alibaba, the Chinese ecommerce and technology company also listed on NYSE, as a backer.

Carl Yeung, the company’s chief financial officer, told Business Insider the firm is going after a market the country’s traditional banks can’t serve. Yeung said reaching the hundred of millions of modest-income Chinese is too expensive for larger financial-services players. Qudian is using nascent technology to capture that market.

“We are looking to use behavioural data, more and more data, to discover business opportunities,” Yeung said.”We are tracking the cutting edge data with artificial intelligence to see who has a high willingness to repay.”

With such technology, the company is able to offer folks higher credit limits and earn a larger margin.

Chinese fintech is red-hot

Qudian’s strong IPO illustrates the red-hot market for fintech in China. Some of the world’s largest privately owned financial technology companies are based in China, including Lu.com, a Shanghai-based personal finance company, valued at $US18.5 billion, according to CB Insights.

A recent study by the consultancy EY found that one in three digital consumers use two or more fintech products. This level, according to EY, indicates that fintech has crossed the threshold of early mass adoption. The firm said adoption is being driven by emerging markets, such as China.

“FinTech adoption by digitally active consumers in Brazil, China, India, Mexico and South Africa average 46%, considerably higher than the global average,” the report said. “From an individual market perspective, China and India have the highest adoption rates at 69% and 52% respectively.”

The firm said emerging markets are more open to fintech disruption because of the large populations of people who are underserved by existing financial infrastructures. Here’s EY:

“Our five emerging markets are characterised by having growing economies and a rapidly expanding middle class, but without traditional financial infrastructure to support demand. Relatively high proportions of the populations are underserved by existing financial services providers, while falling prices for smartphones and broadband services have increased the digitally active population that FinTechs target.”

Yeung said that this environment will open the door to many multi-billion dollar financial technology companies in China. He hopes Qudian will be among them.

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