China's Jianpu trades weakly after $180m US IPO

The company sold 22.5 million American Depository Shares (ADS) at $8.00 apiece, according to a filing, below its target range of $8.50-10.50. The stock opened on November 16 at $8.14 and closed at $8.39. However, the following day, it dropped more than 14% to close at $7.20.

No existing investors sold any shares through the IPO. Indeed, Sequoia Capital committed an additional $5 million as part of the offering, subscribing to 625,000 ADS or 1.56 million Class A shares. The VC firm now holds approximately 15% of Jianpu’s ordinary shares, although its voting power is 4.7% due to the dual-class share structure that favors the four co-founders.

Lightspeed China owns 13.9% of the ordinary shares, Temasek Holdings-owned Pavilion Capital has 6.2%, and KPCB China has 5%. Yunfeng Capital and Sailing Capital both acquired additional shares through private placements agreed concurrently to the IPO and own 6.4% and 7.9%, respectively.

Jianpu’s owner Rong360, which was founded in 2011, provides users with online search and recommendation services for a variety of financial products, including consumer and other loans, credit cards, and wealth management products. It claims to have more than 67 million registered users. In the first nine months of 2017, over 2,500 financial services providers offered more than 170,000 products through the platform.

Rong360 generates revenue from fees charged to financial services providers for recommendation services – for example, it gets paid every time a user completes a loan application or every time a credit card is issued to a user. Additional revenue comes from display and performance-based advertising and marketing services, as well as from big data risk management solutions offered to financial services providers.

The company recorded revenue of RMB356.4 million ($52.6 million) in 2016 compared to RMB168 million in 2015. Over the same period, its net loss decreased by 7.2% to RMB182.1 million.

Rong360 has completed four rounds of funding since inception. Lightspeed and KPCB committed $6 million in a Series A round in 2012, while Sequoia led a $20 million Series B in 2013. One year later, the company completed a $35 million Series C round from Pavilion, Lightspeed, KPCB, and Sequoia. In 2015, it received $125 million in Series D funding from Sailing, Yunfeng, and Sequoia.

There is some discrepancy between the funding commitments detailed in the prospectus and those previously announced by the company. The Series D was at the time said to be worth RMB1 billion ($158 million), while the Series C and B rounds were $60 million and $30 million, respectively.

Several other Chinese online finance companies have listed in the US in recent months. Qudian, a micro-lending services provider, raised $900 million, and peer-to-peer lending platform PPDai got $221 million. Meanwhile, LexinFintech, which has a similar business model to Qudian – its Fenqile platform targets young people who need access to small amounts of credit but who are underserved by traditional financial institutions – is currently marketing its offering.

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• Topics
• Greater China
• IPO
• Financials
• Technology
• China
• Lightspeed Venture Partners
• Sequoia Capital
• Temasek Holdings
• KPCB China Management
• Yunfeng Capital
• sailing capital