Lunar Capital exits China mobile payment business to Ping An

A sale to a financial institution or a merchant - such as an e-commerce platform - was always likely for SmartPay. A number of independent third-party payment platforms in China have struggled in recent years with the rise of Alipay and domestic banks aggressively entering the market.

SmartPay is understood to process nearly RMB10 billion ($1.6 billion) and has been reported to be profitable, but remains a fraction of Alipay's size because it focuses on payments transacted via mobile phones. As part of Alibaba Group, Alipay is more broadly exposed to online payment, receiving transaction fees from Tmall and Alibaba.com.

However, the mobile angle may have been particularly appealing to Ping An - it raises the prospect of insurance agents using mobile devices to sell premiums. "Payments is a huge opportunity, especially for merchants with their own sales force and transactions," an industry source told AVCJ.

As early movers in the payment space, SmartPay and Alipay are the only industry participants that can boast a full set of licenses, enabling them to run payment services, operate online and perform a custodian and processing role much like a bank. This is a significant issue, now that third-party payment is subject to closer regulatory scrutiny and approvals are not easily obtained.

For its part, Ping An has a track record in building internet businesses. The group took an 80% stake in online grocery retailer Yihaodian in 2010 and helped the business become one of China's leading B2C e-commerce players, with 24 million registered users, before selling majority control to Wal-Mart last year. As a financial services company, SmartPay is unlikely to be divested so quickly.

SmartPay was created in 2003 as a spin-out from Linktone, a wireless value-added service provider co-founded by principals at Lunar Capital that went public on NASDAQ in 2004. It was one of a handful of tech-related assets in the China-focused private equity firm's debut fund.

RRE Ventures' early involvement derives from its financial services experience. The US-based firm's managing partner, Jim Robinson, is a well known investor in the payments field while his father and co-founder, who is also called Jim Robinson, was previously chairman and CEO of American Express. Its portfolio companies include mobile payments platforms Payfone and Boom.

Icon is a Swedish venture capital firm formerly led by Goran Malm, ex CEO of General Electric's Asia Pacific business.

 

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• Topics
• Exits
• Greater China
• Technology
• China
• Lunar Capital Management
• Exit
• Trade sale
• TMT