VC-backed Qufenqi raises new round, plans domestic IPO
Qufenqi, a Chinese electronic retailer that allows buyers to pay in installments, has completed a new round of renminbi-denominated funding, having removed its variable interest entity (VIE) structure in preparation for an onshore listing.
The company now has RMB2.77 billion ($420 million) in cash, Min Luo, Qufenqi's CEO, said in an internal e-mail posted on its official Weibo microblog. "We will become the first Chinese internet finance company to dismantle VIEs and return to the domestic IPO market," he said.
The VIE structure exists to allow offshore investors to take equity stakes in companies that operate in sectors in which foreign participation is restricted. Assets to which the offshore investors can have no direct exposure are held in a parallel entity owned by Chinese nationals. Contractual agreements secure the interests of the parent company in the parallel entity. Locally listed companies are not permitted to have VIEs.
Beijing-based Qufenqi was launched in March 2014. It targets college students, allowing them to pay for online purchases, such as smart phones, computers and other electronic goods, in installments.
BlueRun Ventures provided a Series A round of funding to the start-up. Its Series B round was raised in August 2014 from Source Code Capital, Golden Summit and Bluerun. Early last year, Qufenqi raised approximately $100 million led by Shenzhen-listed games developer Kunlun Tech, valuing the company at $250 million.
Ant Financial Service Group, Alibaba Group's online financial services affiliate, led a $200 million round for Qufenqi in August, which was said to be the largest for any Chinese internet finance start-up at that time. Beijing Kunlun Tech, Source Code and BlueRun also participated.
Since then, Qufenqi has expanded its online payments and credit appraisal businesses through collaboration with Ant Financial's Alipay and Sesame Credit.
Qufenqi's main rival is Fenqile.com, which has received funding from Chinese online retailer JD.com. Last December, the start-up scored a $100 million Series B round led by DST Global. Other VC investors in the firm include Matrix Partners, China Renaissance K2 Ventures and Bertelsmann Asia Investment (BAI).
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