PAG commits $300m to China's LexinFintech
PAG has agreed to invest $300 million in LexinFintech, a US-listed financial technology platform provider based in China.
The private equity firm will subscribe to convertible notes with a tenor of seven years and an annual coupon of 2%. The notes can be converted into equity six months after issuance, which is expected to be finalized next week. PAG will have the right to require Lexin to repurchase the notes after four years.
"Lexin has an unparalleled platform for meeting young consumers' credit needs while strictly controlling and minimizing credit risks, which makes it unique, and we are looking forward to supporting the company as it embarks on its next stage of growth,” Weijian Shan, chairman and CEO of PAG, said in a statement.
The company listed on NASDAQ in late 2012 with shares priced at $9.00 apiece. The IPO raised $108 million, with the stock closing 19% higher on its first day. It reached as high as $19.09 in March last year and was trading at $11.19 as of midday September 12, giving the company a market capitalization of around $1.8 billion.
The IPO represented a liquidity event for investors including China Renaissance K2 Ventures, Matrix Partners, and JD.com, although none of them sold any shares. In fact, K2 and JD.com had joined a group of investors acquiring additional exposure. Previous investors also include Taikang Life Insurance and DST Global.
Lexin’s core product is an online platform called Fenqile that provides credit-related services with a focus on Chinese millennials. The company will use the latest investment to expand its user ecosystem, improve the product offering, invest in technology, and develop new business channels. PAG will appoint one person to the board.
Revenue increased 36% during 2018 to about RMB7.6 billion ($1.1 billion) while profit grew eightfold to around RMB2 billion. Jay Wenjie Xiao, chairman and CEO of Lexin, attributed the performance to an expansion of the products and service categories related to Fenqile, as well as increased engagement with e-commerce partners.
PAG has about $30 billion in assets under management across private equity, real estate and absolute return strategies. Its PE division closed its third pan-regional buyout fund last year at $6 billion.
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