Everbright-IDG fund invests $297m in China UnionPay Merchant
China Everbright (CEL) and IDG Capital Partners have acquired a 9.3% stake in China UnionPay Merchant Services (UMS), a third-party payment provider, for RMB2 billion ($297 million).
The investment comes from the Everbright-IDG Industrial Fund, which was launched by two fund managers at the end of June. The vehicle is now the second-largest shareholder after People's Bank of China - which owns more than 51% of UMS - and will help the company integrate its supply chain.
CEL previously was the sole investor in the UMS. Last month, it transferred its entire 9.34% stake to an investment entity called Guangji Consultancy, according to a filing.
UMS, a commercial services arm of state-backed China UnionPay, is China's largest bankcard acquirer and third-largest internet-enabled payment services provider. It processes debit and credit card transactions throughout China. The bankcard acquiring service covers 337 cities, working with more than 5.7 million merchants through a network of seven million point-of-sale (POS) terminals.
James Pan, a member of management decision committee at CEL, told a press conference that it is difficult for emerging third-party players such as Alibaba Group's Alipay to supplant incumbents like UMS. Not only does the company have solid offline operations, but it is also expanding online through cooperative efforts with Tencent and Alibaba.
"Parent company UnionPay has formed partnerships with China Mobile and Apple to explore the mobile payment market, which represents a new investment opportunity for shareholders like us," he added.
The Everbright-IDG Industrial Fund, which has a target corpus of RMB20 billion, has already raised RMB10 billion from CEL and its sister divisions under China Everbright Group. The fund looks for M&A, restructuring and spin-off opportunities in emerging economies, across financial technology and internet banking, entertainment, education, mobile e-commerce, as well as LEDs and semiconductors.
Its first investment was the acquisition of a controlling stake in Shanghai Film Art Academy, with plans to construct a related film and television institute aimed at nurturing the local industry. The fund also backed HC SemiTek Corporation, supporting the company's development in the upstream LED industry, as well as partnering with Forest Lighting to acquire Osram's global business.
More on Greater China
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.