Company Slammed by Short Seller Over Deals Says More Coming

Updated on
  • Credit China aims for at least one more purchase by end-March
  • Previous investments questioned by Anonymous Analytics

Credit China FinTech Holdings Ltd. is planning more investments as it aggressively expands beyond its original loans and lease-financing businesses into online payments and peer-to-peer lending.

The company, part of a consortium that offered to buy a stake in Ping An Securities Group Holdings Ltd. last month, is currently in talks with “multiple” financial-services companies based in Asia outside China, Chief Executive Officer Phang Yew Kiat said in an interview in Hong Kong on Wednesday. The Hong Kong-based firm is targeting at least one more acquisition by the end of the first quarter, he said.

“In order to support my bigger growth, I need to add new things,” Phang said. “What’s important is we need to have multiple revenue streams.”

The firm’s acquisition strategy -- which is now focused outside China -- has been driven by HK$4.3 billion ($554 million) of funds that it raised over the past three years, Phang said. In January alone, Credit China unveiled a $30 million investment in San Francisco-based blockchain technology firm BitFury Group Ltd. and is part of a group that offered HK$664 million for a stake in Ping An Securities.

Since 2013, Credit China’s investments have focused on financial technology-related markets such as third-party payments and peer-to-peer lending, a strategy that boosted transactions on its online platforms to 92.6 million last year from 1.8 million in 2014, data provided by the company show. The firm posted net income of 217.7 million yuan ($32 million) for the nine months to September, almost four times its year-earlier total, the data show.

Questionable Investments

The acquisitions put Credit China onto the radar of short seller Anonymous Analytics, which expressed doubts over some of the investments in December, as it rated the company a “strong sell.” In a report, Anonymous alleged Credit China had engaged in “a number of questionable” investments, including the purchase of a stake in payment provider Shanghai Jifu, which the short seller said was linked to a “key individual” within Credit China.

Credit China issued a strong denial in response, saying that the report presented “a number of malicious and false allegations, misrepresentations and obvious factual errors” about the company. The claim about Shanghai Jifu was “unsubstantiated,” Credit China said, saying that it had access to filings showing that shareholders involved in the transaction were unrelated.

Shares of Credit China in Hong Kong were little changed as of 10:40 a.m. local time. The stock fell 5.3 percent on Dec. 13 when Anonymous Analytics released its report, but has since rallied 49 percent. The gain has driven the company’s market capitalization to $3 billion.

The firm’s investments include third-party payment company UCF Huisheng Investment (HK) Co. and a controlling stake in mobile game operator Shenzhen Qiyuan Tianxia Technology Co. Last year, the company made its first majority investment outside Greater China by acquiring a 51 percent stake in Vietnam’s Amigo Technologies Joint Stock Co.

If needed, Credit China will raise more capital “at the right price” for acquisitions, said Phang, a former banker who has worked at Standard Chartered Plc.

“It’s a natural progression,” he said, regarding his firm’s recent acquisitions. “What I’m trying to build actually is to have bigger product segments.”

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