Fintech’s New Big Player: JD Finance Adds $2B, Hits $26-30B Valuation

According to a China Securities Journal report, the China International Capital Corporation (CICC) and China’s largest food processor, manufacturer and trader China National Cereals, Oils and Foodstuffs Corporation (COFCO) are looking to invest US$2 billion (CNY 13 billion) in JD Finance, the fintech spinoff of online retailer JD.com.

The funding will be applied to acquiring financial licenses through mergers and acquisitions, technology research and development, and further investments. The investing institutes will hold 10 billion JD Finance shares. The transaction is expected to be completed by end of April and will raise JD Finance’s market valuation to a colossal US$26 billion to $30 billion.

Established in late 2013, JD Finance has provided fintech services to more than 500,000 corporate clients and 150 million individual consumers. Parent JD.com is Alibaba’s main domestic competitor and the largest Chinese online retailer by revenue, with 335 warehouses covering 2,691 counties and districts in China as of mid-2017.

In January 2016 the company raised Series A funding of US $1 billion (CNY 6.65 billion) from Sequoia Capital China, China Harvest Investments, and China Taiping Insurance, boosting its valuation to $7 billion and becoming the third-largest fintech company in China, after Alibaba’s Ant Financial and Shanghai-based online finance marketplace LuFax.

JD Finance separated from JD.com in June 2017 and now stands alone as a domestically funded company. This is similar to Alibaba’s splitting AliPay from Alibaba. The partition helps JD Finance dodge JD.com‘s overseas investment affiliations and impediments to procuring financial licenses.

Last year JD Finance filed revenues of US$1.6 billion, a 132% increase on 2016. Financial services accounted for 51% of revenues; payment business 15%, and logistics finance and wealth management 15% and 12% respectively.

JD Finance’s Silicon Valley AI Lab Chief Scientist Bo Liefeng is the former principal research scientist at Amazon. He led the AI research team for Amazon Go’s recently opened staff-free store in Seattle. Last year JD Finance launched an international hackathon, attracting talents in the areas of artificial intelligence, big data, and cloud computing.