OTPP leads $154m round for Chinese microfinance player
Ontario Teachers’ Pension Plan (OTPP) has led a RMB1 billion ($153 million) funding round for CD Finance, a China-based provider of loans and other financial services to small businesses in rural areas.
ABC World Asia, an impact investment business launched by Temasek Trust, the philanthropic arm of Temasek Holdings, re-upped in the round. CD Finance was one of five companies ABC World Asia backed in 2020. The Rise Fund, TPG’s impact investment arm, is also an investor in the business.
CD Finance – formerly known as CFPA Microfinance Management – received initial funding from Sequoia Capital China and the International Finance Corporation (IFC) in 2010. Sequoia put in $9 million for a 25% stake and IFC contributed $5.3 million for 14%, AVCJ Research’s records show.
IFC made an additional commitment of around $24 million in 2016 and then Ant Group put in an unspecified sum later the same year to become the second-largest shareholder. In 2018, The Rise Fund led a Series C round of approximately RMB1 billion ($144 million).
CD Finance was established by the China Foundation for Poverty Alleviation in 1996 and subsequently transitioned into a market-oriented microfinance institution. It claims to be the first and largest social enterprise in China.
The company has more than 6,000 staff in 410 county branches across 20 provinces in China. It claims to have served more than seven million rural customers, typically micro and small-sized enterprises, offering a combination of microcredit, microinsurance, agricultural input e-commerce, and direct procurement of agricultural outputs, as well as training.
Dongwen Liu, chairman and CEO of CD Finance, said in a statement that the new funding would go towards expanding the breadth and depth of services, including cloud-based solutions.
“CD Finance’s innovative business model and leading technology platform position the company well to further accelerate rural China’s development,” added Olivia Steedman, a senior managing director at Teachers’ Innovation Platform, an OTPP strategy that focuses on late-stage venture and growth equity investments in companies that use technology to disrupt incumbents and create new sectors.
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