EQT buys stake in Chinese payment services provider VBill
EQT has agreed to acquire a minority stake in VBill, a third-party payment services provider in China that focuses on small and medium-sized enterprises (SME) for RMB378 million ($55.8 million).
The private equity firm said in a statement that it would take a 10% interest in VBill. However, a filing by Hong Kong-listed Hi Sun Technology, VBill's parent, indicated the stake would be 11.21%. This is the first of a two-tranche process that could see EQT acquire up to 15% of VBill for RMB580 million ($85.7 million). Under this scenario, Hi Sun's shareholding would be diluted to 68.03%. The deal is expected to close in the first half of 2019.
EQT has a put option that would require VBill to redeem its shares for up to RMB740.7 million if an IPO doesn't occur within five years. Moreover, should a listing happen within this timeframe but the company fails to meet an agreed valuation, the private equity firm would be compensated in the form of additional equity.
Founded in 2011 and headquartered in Beijing, VBill offers payment solutions including processing payments made by bank card, omnichannel payments, and online payments, among others. It also offers value-add services such as consumer lending.
EQT intends to help the company further expand into lower-tier cities and accumulate more SME customers, with a particular focus on developing the consumer lending business. VBill is also interested in expanding overseas into markets like Europe, Latin America, and Southeast Asia.
VBill is currently valued at RMB5.8 billion. It processed over RMB1.1 trillion in transactions in 2017, achieving revenue of RMB1.7 billion and net income of RMB190.1. In 2016, revenue and net income reached RMB885.7 million and RMB133.5 million, respectively.
The investment comes from EQT’s Asia mid-market fund, which closed at $800 million last year and targets deployments in the EUR40-100 million ($47-119 million) range.
The private equity firm typically partners with the management teams of portfolio companies on growth initiatives. This was a feature of previous investments such as Shanghai Artwall Environmental Technology, a Chinese wallpaper manufacturer, and China Shine, a facilities management service provider.
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